16 April 2015
Vela Technologies plc
("Vela" or the "Company")
Corporate update
Introduction
Vela Technologies plc (AIM: VELA), the investing company focussed on early stage and pre-IPO disruptive technology investments, is pleased to take this opportunity to update shareholders on the progress of the investments made to date. Since Vela adopted its existing investing policy in January 2013 the Company has invested in 8 companies.
Within the investment portfolio the board of Vela is seeing some of the companies demonstrating that their potential value is materially higher than the value that was ascribed to them at the time of the Company's investment. In particular the board of Vela is encouraged by the recent progress made by Portr Limited, StreamTV Networks Inc. and Disruptive Tech Limited.
As a small investing company quoted on AIM it has, at times, proved challenging for Vela to attract long term, supportive shareholders who understand and appreciate Vela's investing strategy and the disruptive technology sector. However more recently the board of Vela has seen an improved understanding on the part of investors particularly as the investment portfolio has evolved. This was illustrated at the time of the oversubscribed placing which raised £300,000 for the Company in February 2015 from new investors and existing shareholders.
Over the coming 12 months we anticipate that there will be increased visibility for certain of our unquoted investments. The board of Vela is hopeful of contract news as well as expansion and liquidity events in a number of our investee companies during the course of 2015 which may further enhance the value of these investments. In tandem with this we expect that, as these investments mature, Vela will be better placed to update shareholders as certain investee companies come through their early development phase.
As well as managing the existing investment portfolio and seeking to generate value from these investee companies, the board of Vela is keen to expand and broaden the investment portfolio as and when the right opportunities arise. In this respect the board of Vela is examining prospective investment opportunities in line with the Company's investing policy and which provide medium term growth prospects in disruptive technology businesses.
Summary of investment portfolio
The Company's investment portfolio consists of the following investments:
· Portr Limited - a private UK company that is the owner of an on-demand airport luggage transfer service, AirPort. Portr employs leading-edge technology across its web booking platform and logistics engine in the development of convenience-orientated services for customers.
· StreamTV Networks Inc. - a private US company that has developed a technology called Ultra-D that enables viewers to view 3D media without glasses and from any angle.
· Disruptive Tech Limited - a private technology investment business focusing on companies that can "disrupt" and which owns and manages investments in six technology businesses.
· 3Legs Resources plc (AIM: 3LEG) - AIM quoted investing company whose investing policy is to invest in and/or acquire companies within the technology sector or within the resources sector where a resource can be brought into production through the application of modern technologies.
· Advance Laser Imaging Limited - a private company which uses laser scanning hardware and software applications to produce 360 degree 3D images and models.
· Rosslyn Data Technologies plc (AIM: RDT) - AIM quoted company whose cloud-based service provides a fast and efficient way for companies to use and understand their data.
· The Social Superstore Limited - a private company developing an online social commerce platform with a view to full launch in the UK in H2 2015.
· Imaginatik plc (AIM: IMTK) - AIM quoted company who are the world's first full service innovation provider offering a range of technology products and consultancy.
At 31 March 2015, the Company had estimated cash balances of £152,000 (based on unaudited management accounts) reflecting the recent investments made.
Update on investment portfolio
There have been a number of significant developments within the Company's portfolio in recent months. The following summary includes a number of updates recently provided by the investee companies to the board of Vela.
Portr Limited ("Portr") (£100,000 invested, 4.4 per cent. equity interest)
Portr, the owner of on-demand airport luggage transfer service, AirPortr, can report an encouraging initial nine months of trading since launching its first location, London City Airport ("London City"), in the summer of 2014.
Since launching this new way to travel, thousands of passengers flying via London City have embraced the concept of travelling around the city without their luggage in tow, while it is delivered between their London location and the airport same day, something Portr calls "Luggage Freedom". During this period Portr can report an unblemished record with every item delivered on or before time. In addition to this the company has seen a high percentage of repeat journeys by users (20% of deliveries) particularly amongst frequent business travellers. In addition to this Portr's user base is more diverse than originally anticipated with stronger than expected demand from leisure travellers and London residents, when the service was originally predominantly targeting the foreign inbound business traveller market, staying in hotels.
Shortly after launching the Standard AirPortr delivery service Portr announced a collaboration with British Airways in delivering a first of its kind Carousel Collection and Delivery service, enabling arriving passengers to also skip the wait at the baggage reclaim. AirPortr's mobile airport Concierges can now collect and clear passengers' luggage direct from the baggage reclaim before delivering into London within hours, an experience British Airways named 'Land & Leave'. Having been initially trialled with British Airways Executive Club on two key domestic routes the service was recently rolled out onto all domestic routes for all British Airways passengers following positive feedback which included:
§ Helped reduce travel costs with frequent business travellers opting to use public transport when alleviated of their bags
§ Enabled quicker and easier travel around London, driving productivity
§ Journey time savings of up to an hour allowed passengers to either fit in another meeting or catch a later flight into London City
Portr has made a Border Force policy submission in a bid to now extend this service to EU arrivals; something the company is hoping to secure clearance for later this year, with a report having been produced by senior security and border experts endorsing the service due to its ability to enhance border integrity with the advanced technology developed and deployed by Portr. British Airways has confirmed that it plans to extend the service (Carousel Collection) to international destinations within Europe when such clearance can be obtained.
Following proof of concept and service delivery at London City, Portr has agreed terms and is finalising launch plans with two additional London airport locations which the management of Portr anticipate will be "live" in the peak summer periods in 2015. This will see the AirPortr operation and service usage grow significantly. Portr expects to be in a position to announce its launch date for one of these major airports in the coming weeks.
In line with Portr's expansion and rollout in larger London airports, to support a number of 'superbrand' partnerships such as British Airways and a pipeline of product development further simplifying the end-to-end passenger journey, Portr announced a £3 million Series A funding round at the end of 2014. Having secured the backing of existing shareholders, new angel investors and a well-known venture capital trust, Portr expects to announce completion of the round in the coming weeks giving a post-money valuation of £15 million.
StreamTV Networks Inc. ("StreamTV") ($100,000 invested by way of convertible loan note)
StreamTV has developed a technology called Ultra-D that enables viewers to view 3D media without glasses and from any angle. As a licensing type business model, Stream TV is expected to generate positive cashflow once its licensing partners commence small sales.
In October 2013 the Company made a minority investment of $100,000 in StreamTV by way of a convertible loan note. The loan notes accrued interest at the rate of 12% annually until 31 December 2014 and are currently accruing interest at the rate of 13% annually. The final maturity date on the loan notes is 31 December 2015.
StreamTV has made a number of operational developments over recent months. New machinery to enable sophisticated gluing of the 3D optical system to the underlying 2D panel was deployed in China and is running effectively. Two automated machines, with a higher capacity and higher yields, have been ordered. The intention is for one machine to be deployed in Q2 2015 and the other in Q3 2015. The automated machines will be housed at StreamTV's large manufacturing partner's facility to establish the foundation for scaling the volume of production.
StreamTV has formally commenced their next round of capital raise. The capital raise is primarily earmarked for enabling cost-downs for the devices and allow more vertical business opportunities to be commenced much sooner than by way of using only operational cash flow.
Just as StreamTV had expected, the fact that they are close to producing and entering the TV/display market has accelerated interest in their tablet device opportunity. The company had a tablet sample based on its 3D Ultra-D technology at the Consumer Electronics Show in Las Vegas this past January. However the company has since improved that sample with even newer optics and the company is in discussions about a possible collaboration with one of the largest tablet makers globally.
StreamTV is also in ongoing discussions with critical component suppliers who are providing support and important product improvements. The company now engages directly with a large global chip company to provide a supply of a type of chip called an FPGA, rather than engaging with distributors, and this has reduced the order lead times.
StreamTV is also in discussions with a number of other partners including an Asian-based chip company that supplies chips used for TVs and who have informed StreamTV that they would seek to allow them access to their latest chips to integrate into their devices. This opportunity would help strengthen StreamTV's foothold in the TV industry and allow increased TV-type functionality than is currently experienced in the current models.
In summary, operations and capital efforts are all on track to establish a good foundation for manufacturing operations in China this summer and generate sales through the second half of the year. The goal for 2015 is that the company's 2015 Ultra-D technology creates technology awareness in each marketplace from early sales and also establishes, through its partners, a solid manufacturing base of operations so that 2016 can yield a steady and fast paced sales growth.
Disruptive Tech Limited ("DTL") (£250,000 invested, 0.63 per cent. equity interest)
DTL invests in technology-centric businesses that have the potential to disrupt, typically investing alongside seasoned entrepreneurs who have been successful in their marketplaces previously.
Vela originally acquired 262,090 Ordinary Shares in eSeekers Limited for £250,000. Following an agreed corporate restructuring, the Company ended up with an equivalent interest in DTL, a Gibraltar-based technology-focused investing company.
DTL has a portfolio of 6 investments, including Nektan (13%), VNU Holdings (65%) and Freeformers (5%). The normal timeframe for investments is 3 to 4 years following which DTL looks to exit an investment and dispense proceeds back to shareholders.
It is currently anticipated that the process of divesting of investments, which commenced with the listing of Nektan on AIM in November 2014, will continue, which could result in a significant uplift in the value of the DTL portfolio.
3Legs Resources plc ("3Legs") (£40,025 invested, 4.41 per cent. equity interest)
3Legs is an Isle of Man incorporated investing company whose shares are traded on AIM. In February 2015, 3Legs completed a corporate reorganisation which included the adoption of a new investing policy to invest in and/or acquire companies within the technology sector or within the resources sector, particularly where a resource can be brought into production through the application of modern technologies.
Between 27 February 2015 and 25 March 2015, Vela acquired a total of 19,000,000 shares in 3Legs at an average price of 0.21 pence per share for a total consideration of £40,025.
As at the date of this announcement Vela's interest in 3Legs is valued at £52,250 (as referenced to 3Legs's closing mid-market share price on 15 April 2015).
Advance Laser Imaging Limited ("ALI") (£75,000 invested, 6.25 per cent. equity interest)
Vela made a £75,000 investment in ALI in September 2013, a company which uses laser scanning hardware and software applications to produce 360 degree 3D images and models. Such images can be created for anything from small components or pieces of forensic evidence at a micron level, up to buildings, industrial plants or areas of a town and can be utilised and manipulated to view scenes from multiple perspectives at varying levels of detail, without any further scanning or photography. The 3D scenes are used in crime scene investigations and specialist techniques are used to establish anything from bullet trajectory to suspect biometric information. The technology also has a number of applications for counter terror, resilience and safer cities.
There are markets in both the private and public sectors including the military, property development and services, police/blue light services, architecture, insurance and legal services, both in the UK and abroad.
ALI raised £300,000 in September 2013 to launch the business and is in the process of raising additional funds to invest in further research and development, into new products and applications in both core and new markets.
ALI won its first commercial contract in December 2013 and revenues have begun to be generated by ALI. With the company's low cost base, ALI is currently cashflow positive as they continue to penetrate further into existing markets and open up new markets. The company is focused on developing the forensic and counter terrorism policing market in the UK but also establishing a high value business in very specific export markets in the Middle East and the United States over the next year.
Rosslyn Data Technologies plc ("Rosslyn" or "RDT") (£130,226 invested, 0.53 per cent. equity interest)
The Company invested £100,000 in October 2013 in Rosslyn Analytics Ltd, RDT's main operating subsidiary in the UK. Rosslyn was the first of the Company's investment portfolio to achieve a flotation having floated on AIM in April 2014. Subsequent to the flotation of RDT, Vela invested a further £30,226 in Rosslyn and, as at the date of this announcement, Vela owns 403,368 shares in RDT.
RDT's cloud-based service provides a fast and efficient way for companies to use and understand their data. The Company recently announced a new major partnership in the US higher education sector.
As at the date of this announcement Vela's interest in Rosslyn is valued at approximately £53,446 (as referenced to Rosslyn's closing mid-market share price on 15 April 2015).
The Social Superstore Limited ("The Social Superstore") (£100,000 invested, 2.5 per cent. equity interest)
In May 2014 Vela made an investment of £100,000 in the £1m series B funding of The Social Superstore.
The Social Superstore is a peer to peer platform allowing users to recommend products to their friends and gain rewards for doing so and is aiming to combine social media and online retail in a unique way. The Social Superstore continues to build its social commerce platform with a view to full launch in H2 2015, initially in the UK. There are a number of key user groups that have been identified and who the company has access to.
The directors of The Social Superstore continue to believe that social commerce represents a significant opportunity which has not been fully exploited by a single company.
Imaginatik plc ("Imaginatik") (£35,000 invested, 0.67 per cent. equity interest)
The Company invested £35,000 in Imaginatik in April 2014. Imaginatik is an AIM quoted company that provides a range of innovation solutions comprised of consultancy, enterprise software and program management to deliver innovation results to companies such as The World Bank, The Chubb Group of Insurance Companies, State Farm, Exxon Mobil, Pfizer, Goodyear, the Yorkshire Building Society, Pitney Bowes and Cargill.
Vela sold 100,000 shares in Imaginatik at a price of 3.625 pence per share on 14 April 2015 for a consideration of £3,585. As a result Vela owns, as at the date of this announcement, 425,000 shares in Imaginatik.
As at the date of this announcement Vela's interest in Imaginatik is valued at £14,875 (as referenced to Imaginatik's closing mid-market share price on 15 April 2015).
Conclusion
Brent Fitzpatrick (Non-Executive Chairman) and Antony Laiker (Executive Director) commented: "The disruptive technology sector is alive with new and innovative ideas and products. Investors may be familiar of terms such as "Fintech" and the "sharing economy" as well as the continued strong attention being given to "Bitcoin". There are many UK-based companies operating in these areas that could be attractive investment opportunities for Vela. We are currently at an early stage of evaluating a couple of such opportunities which will need to satisfy our requirement for being disruptive but also be easy to understand, have strong growth prospects and a clear exit strategy. We look forward to keeping shareholders updated."
For further information:
Vela Technologies plc |
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Brent Fitzpatrick, Non-Executive Chairman Antony Laiker, Director |
Tel: +44 (0) 7802 262 443 |
Allenby Capital Limited (Nominated Adviser) |
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Nick Athanas/Katrina Perez/James Reeve Vicarage Capital Limited (Broker) Rupert Williams/Jeremy Woodgate |
Tel: +44 (0) 20 3328 5656 Tel: +44 (0) 20 3651 2910 |
