TIDMVLE
RNS Number : 5677A
Volvere PLC
25 May 2023
25 May 2023
Volvere plc
("Volvere" or the "Group")
Final Results for the year ended 31 December 2022
Volvere plc (AIM: VLE), the growth and turnaround investment
company, announces its audited Final Results for the year ended 31
December 2022.
Highlights
GBP million except where stated Six months
Year ended ended
31 December 31 December 30 June
2021
2022 (as restated 2022
(1) )
(unaudited
and as restated
(1) )
Group revenue - continuing operations 38.03 30.70 15.79
Group profit/(loss) before tax
- continuing operations 2.33 1.07 0.39
Loss from discontinued operations (2.39) (1.08) (1.51)
Group (loss)/profit after tax (0.06) 0.06 (1.12)
As at As at As at
31 December 31 December 30 June
2022 2021 2022
Consolidated net assets per share
(excluding non-controlling interests)(2) GBP13.90 GBP13.49 GBP13.33
Group net assets 35.75 37.05 36.05
Cash and available-for-sale investments 20.79 21.87 20.39
-- Good performance from Shire Foods, the Group's savoury pastry products manufacturer
-- Losses at Indulgence curtailed following decision to close in the second half of 2022
-- Strong financial position maintained
Forward-looking statements:
This report may contain certain statements about the future
outlook for Volvere plc. Although the Directors believe their
expectations are based on reasonable assumptions, any statements
about future outlook may be influenced by factors that could cause
actual outcomes and results to be materially different.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
Note
1 The comparative results for the year ended 31 December 2022
and the period to 30 June 2022 have been restated to exclude the
results of Indulgence Patisserie, which was discontinued during the
year. The results of that business have been reported as
discontinued operations.
2 Based on the net assets attributable to owners of the parent
company and the respective period end shares in issue (excluding
treasury shares), which were 2,364,422 at 31 December 2022,
2,568,422 at 31 December 2021 and 2,516,422 at 30 June 2022.
For further information:
Volvere plc
Jonathan Lander, CEO Tel: +44 (0) 20 7634 9707
www.volvere.co.uk
Cairn Financial Advisers LLP (Nominated Tel: + 44 (0) 20 7213 0880
Adviser)
Sandy Jamieson / James Caithie
Canaccord Genuity Limited (Joint Broker) Tel: + 44 (0) 207 523 8000
Bobbie Hilliam
Hobart Capital Markets LLP (Joint
Broker)
Lee Richardson Tel: +44 (0) 20 7070 5691
Notes to editors:
Volvere plc (AIM: VLE), is a growth and turnaround investment
company. The Group's current trading business is involved in food
manufacturing. The Group currently employs approximately 275
people.
For further information, please visit www.volvere.co.uk .
Chairman's statement
I am pleased to report on the results for the year ended 31
December 2022.
The Group's performance in 2022 was satisfactory given that we
closed one of our two subsidiaries in the second half of the year.
The decision to close Indulgence Patisserie, whilst regrettable,
was necessary to curtail increasing losses. Our other subsidiary,
Shire Foods, performed well in a highly inflationary
environment.
Group revenue from continuing operations was GBP38.03 million
(2021 as restated: GBP30.70 million) and the profit before tax from
continuing operations was GBP2.33 million (2021 as restated:
GBP1.07 million).
Following share buy-backs in the year, the Group's total net
assets were GBP35.75 million (2021: GBP37.05 million), with net
assets per share* increasing to GBP13.90 (2021: GBP13.49). This
places the Group in a strong position to capitalise on
opportunities as they arise.
David Buchler
Chairman
25 May 2023
*Net assets attributable to owners of the parent company divided
by total number of ordinary shares outstanding at the reporting
date (less those held in treasury), see note 21.
Chief Executive's statement
Principal activities
The Company is a holding company that identifies and invests in
undervalued and/or distressed businesses and securities as well as
businesses that are complementary to existing Group companies. The
Company provides management services to those businesses. The sole
activity of the Group's continuing trading subsidiary, Shire Foods
Limited ("Shire"), during the year was food manufacturing.
Operating review
The closure of Indulgence Patisserie Limited ("Indulgence") was
the first unsuccessful turnaround in Volvere's 20+ year history.
The decision was difficult but we think correct due to Indulgence's
specific challenges as well as the wider economic environment. In
line with most businesses in the UK, Indulgence faced significant
volatility and upward pressure in raw material costs and overheads,
as well as having to recruit within a challenging labour market.
Indulgence's less efficient operating scale meant that its business
was, on balance, no longer viable. Indulgence has been classified
as discontinued operations for reporting purposes and comparative
results for 2021 have been restated accordingly.
Shire's performance on the other hand was very good.
Group revenue from continuing operations (all of which relates
to Shire) was GBP38.03 million (2021 as restated: GBP30.70
million). The Group's profit before tax from continuing operations
for the year was GBP2.33 million (2021 as restated: GBP1.07
million). The Group's overall loss (including discontinued
operations) for the year was GBP0.06 million (2021: profit GBP0.06
million). Further information is contained in the Financial
review.
Shire Foods - continuing
Shire, in which the Group has an 80% stake, was acquired in 2011
and manufactures frozen pies, pasties and other pastry products for
food retailers and food service customers from its factory in Royal
Leamington Spa.
Shire continued to grow in 2022, with revenues increasing by
approximately 24.2% to a new record of GBP38.03 million (2021:
GBP30.61 million). Profit before tax, intra-group interest and
management charges* was approximately GBP2.78 million (2021:
GBP2.14 million). Profit before tax was GBP2.43 million (2021:
GBP1.89 million) - with the difference being intra-group interest
and management charges.
Shire continued its strategy of developing new products and
increasing factory capacity to meet customer growth, which has been
across both retail and food service. Whilst energy and raw material
prices increased rapidly in 2022, Shire was able to implement new
pricing with its customers to mitigate some of the effect on
margins. Whilst labour costs are expected to increase further in
2023, there are signs that raw material price increases and energy
prices are abating. Other significant costs, particularly transport
and logistics, have been stable so far in 2023. We continue to
monitor and discuss pricing with customers to ensure Shire remains
competitive yet financially robust and able to invest in further
growth of site capacity.
Further information about Shire can be found at
www.shirefoods.com .
Indulgence Patisserie Limited - discontinued
Manufacturing was suspended in August 2022 and did not
recommence given the outlook for the business. All roles were,
regrettably, made redundant. The result for Indulgence reflects the
trading losses in the year along with the inevitable write-downs of
stock, plant and equipment whose value was impaired following the
decision to cease trading. The overall loss for the year was
GBP2.39 million. Further information relating to Indulgence is
given in the Financial review and Note 6.
Investing and management services
The Group's investing and management services segment comprises
central overheads, partially offset by management and interest
charges to Group companies and returns from treasury management
activities on current asset investments.
Outlook
Whilst 2022 was, by any measure, a challenging year, we have
ensured the continued success of Shire and maintained the Group's
robust financial position. In the wider economy, we are seeing an
increasing number of investment opportunities across multiple
sectors as businesses grapple with higher interest rates, energy,
raw material and staff costs at a time of flat or reduced demand.
Our strong balance sheet will enable us to capitalise on these
opportunities as they arise.
Jonathan Lander
Chief Executive
25 May 2023
* profit before intra-group interest and management charges is
considered to be a relevant, useful interpretation of the trading
results of the business such that its performance can be understood
on a basis which is independent of its ownership by the Group.
Financial review
Detailed information about the Group's segments is set out in
note 5 which should be read in conjunction with this financial
review and the Chairman's and Chief Executive's statements.
Overview
The decision to close Indulgence Patisserie during 2022 means
the results of that business have been classified as discontinued
operations and the comparative results for 2021 have been restated
for comparability. Group revenue from continuing operations (all of
which relates to Shire Foods) was GBP38.03 million (2021 as
restated: GBP30.70 million), an increase of almost 24%.
The Group's profit before tax from continuing operations for the
year was GBP2.33 million (2021 as restated: GBP1.07 million). The
Group's overall loss (including discontinued operations) for the
year was GBP0.06 million (2021: profit GBP0.06 million).
The trading performance of each of our businesses is outlined in
the Chief Executive's statement and set out further below and in
note 5.
Food manufacturing
Following the decision to close Indulgence Patisserie, this
segment now includes only the trading of Shire Foods, which
manufactures savoury pastry products.
Shire Foods
Partly driven by price inflation and partly by increased
volumes, revenue for the year was GBP38.03 million (2021: GBP30.61
million), with a profit before tax, intra-group interest and
management charges of approximately GBP2.78 million (2021: GBP2.14
million)*. Profit before tax was GBP2.43 million (2021: GBP1.89
million) - with the difference being intra-group interest and
management charges.
With raw materials pricing increasing significantly across the
board, Shire's materials margin percentage for the year as a whole
was lower than 2021. However, the efforts made to implement price
increases with customers during the year saw the materials margin
percentage recover in the second half of the year. This, in spite
of other increasing costs - particularly those relating to labour -
along with the effects of increased volume resulted in overall
increased profitability.
During 2022, Shire continued to provide operational and
commercial support to Indulgence Patisserie and this again has
resulted in some costs being recharged which would otherwise have
been borne by Shire.
As highlighted last year, Shire has continued to invest in
increasing factory capacity. Capital expenditure in 2022 was
GBP1.01 million (2021: GBP0.27 million), of which GBP0.89 million
(2021: GBP0.27 million) was funded from Shire's own resources, with
the balance funded by way of debt.
Shire continued to be able to meet its own working capital needs
throughout in the year, using external borrowings where required.
Following the year end, the company declared and paid a dividend of
GBP2.50 million (2021: GBPnil), of which the Group's share was GBP2
million.
The 5-year financial performance of Shire is summarised in the
table below:
Year ended Year ended 31 Year ended 31 Year ended 31 Year ended 31
31 December December December December
December 2021 2020 2019 2018
2022 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
Revenue 38,027 30,605 27,189 23,036 18,344
Underlying
profit
before tax,
intra-group
management
and interest
charges 2,777 2,139 1,813 1,384 854
Intra-group
management
and
interest
charges (348) (252) (200) (200) (200)
________ ________ ________ ________ ________
Profit
before tax 2,429 1,887 1,613 1,184 654
* profit before intra-group interest and management charges is
considered to be a relevant, useful interpretation of the trading
results of the business such that its performance can be understood
on a basis which is independent of its ownership by the Group.
Discontinued operations - Indulgence Patisserie
As noted above, the decision was made in 2022 to close the
Indulgence Patisserie business, which manufactured frozen desserts
and cakes. The decision followed a period of growing losses
resulting from substantial raw material and energy increases which
made the business unviable.
The business's principal sites were freehold and one of three
has been sold since the year end at a modest premium to its book
value. The remaining two sites are to be separated (they are
currently connected) and will be marketed individually. Whilst
there may be some limited costs associated with Indulgence in 2023,
the Group does not expect these to be material.
For the year as a whole, Indulgence's losses were GBP2.39
million (2021: GBP1.08 million), stated after the costs associated
with the closure. Inevitably, there were impairments in respect of
the carrying value of plant and equipment and stock. There remain
some unresolved third-party claims in relation to the closure which
may result in the trading company, Indulgence Patisserie Limited,
being placed into liquidation. This is not expected to impact the
Group materially.
Financial information relating to Indulgence is set out in note
6 to the financial statements.
Throughout the period the Group continued to provide working
capital loans to Indulgence. Following the decision to close the
business, extensive efforts were made to realise value for the
company's assets, particularly debtors and stocks. As a result,
Indulgence indebtedness to the Group reduced in the second half of
2022 and, with the disposal of one of the freehold properties in
2023, has reduced further. The amounts outstanding as at 31
December 2022 were as follows:
As at 31 December As at 31 December
2022 202 1
GBP'000 GBP'000
Brought forward 5,555 4,240
Working capital loans provided during period 898 1,315
________ ________
Group loans outstanding* 6,453 5,555
* excluding intra-Group trading balances
Investment revenues, other gains and losses and finance income
and expense
The Group adopted a more active treasury management strategy
during the year and this resulted in improved yield on the Group's
cash with gains realised on disposal of available for sale
investments of GBP0.58 million (2021: GBPnil) and investment
revenues excluding interest of GBP0.11 million (2021: GBPnil).
The Group's net finance expense was in line with the prior year
at GBP0.13 million (2021: net GBP0.14 million). Individual Group
trading companies continue to utilise leverage where appropriate,
and without recourse to the remainder of the Group, which attracts
some external interest expense.
Statement of financial position
Overall position
Year-end Group net assets were lower than the prior year at
GBP35.75 million (2021: GBP37.05 million), a reduction of GBP1.30
million. This reduction is after treasury share purchases of
GBP2.09 million; net assets per share increased to GBP13.90 (2021:
GBP13.49).
Cash and available for sale investments
Year-end cash totalled GBP19.14 million (2021: GBP21.87
million), a reduction of GBP2.73 million.
Outside of the underlying trading results from operations and
associated working capital movements, the principal outflows of
cash during the year arose from the purchase of treasury shares
(GBP2.09m), the purchase of plant and equipment in continuing
businesses (GBP0.89 million) and the repayment of borrowings for
continuing businesses (GBP0.58 million). The Group's cash flow is
shown below.
During the year the Group invested in equity securities pursuant
to its treasury management policies. The investments held at year
end are carried at fair value (GBP1.65 million, 2021: nil).
Dividends
In accordance with the policy set out at the time of admission
to AIM, the Board is not recommending the payment of a dividend at
this time and prefers to retain such profits as they arise for
investment in future opportunities, or to purchase its own shares
for treasury where that is considered to be in the best interests
of shareholders.
Purchase of own shares
During the year the Company purchased 204,000 (2021: 3,500) of
its own shares, which are held in treasury, at a cost of GBP2.09
million (2021: GBP0.04 million).
Earnings per share
Basic and diluted profit per ordinary share from continuing
operations was 74.36 p (2021: restated 30.36 p). Basic and diluted
loss per ordinary share from discontinued operations was (95.89)p
(2021: restated (41.97)p). Total basic and diluted loss per
ordinary share was ( 21.53 )p (2021: (11.6 1 )p).
Investing strategy
The Company's investing strategy is to invest in, or acquire:
quoted companies where, in the Directors' opinion, the market
capitalisation does not reflect the value of the assets; any
company that is in distress but offers the possibility of a
turnaround; and any company that fits strategically with an
existing portfolio investment.
The Company may also invest in quoted or unquoted start-up,
early or development-stage companies in sectors where the Directors
have experience of investing or where they have identified
management teams with experience in those areas.
The Company may invest in any company (or similar structure) or
third-party fund on a short or long-term basis, where the Directors
have experience of investing, especially where such investment is
complementary to an existing, or similar to a past, investment of
the Company.
The Company may also create and invest in fund vehicles owned,
managed or controlled by the Company, including where there is the
possibility of raising third party investment; and invest in third
party funds where the investment strategy of those funds is in the
Directors' opinion similar to that of the Company, and specifically
including funds that invest in distressed debt and equity, or that
invest in derivative securities of distressed debt or equity.
The Company has a preference for active rather than passive
investing and for holding a small number of investments, including
a single investment, and does not necessarily seek to diversify
risk across a wide range of investments, unless this can be
achieved without affecting the Company's active investment style.
The Company's preference is to make investments in the UK and
Continental Europe.
Where the Company makes a direct investment, investment
decisions will be made by the Directors, who collectively have many
years of experience in selecting and managing investments.
Investments made by fund vehicles, if owned, managed or controlled
by the Company, will be made by the executives of the investment
manager of the fund vehicle, which will include representatives of
the Board. Investments made by fund vehicles owned, managed or
controlled by third parties, will normally be made by the fund
investment manager which may or may not include the involvement of
Company executives. Screening and due diligence of potential
investments (including any initial investment in a fund vehicle)
will be carried out by the executive management of the Company. Any
decision on whether to proceed will be made by the unanimous
decision of the Board.
Outside consultants and professional advisers will be used where
appropriate but the Company will endeavour to keep this to a
minimum in order to control expenses.
The Board seeks shareholder approval for the investing strategy
on an annual basis. The Directors expect to be able to find
suitable investment or acquisition candidates within the next 12
months, however there is no time limit and if no suitable
acquisition or investment has been identified before the Company's
next annual general meeting, the Directors may review the Company's
investing strategy at that time.
Key performance indicators (KPIs)
The Group uses key performance indicators suitable for the
nature and size of the Group's businesses. The key financial
performance indicators are revenue and profit before tax. The
performance of the Group and the individual trading businesses
against these KPIs is outlined above, in the Chief Executive's
statement and disclosed in note 5.
Internally, management uses a variety of non-financial KPIs as
follows: in respect of the food manufacturing sector order intake,
manufacturing output and sales are monitored weekly and reported
monthly.
Principal risk factors
The Company and Group face a number of specific business risks
that could affect the Company's or Group's success. The Company and
Group invests in distressed businesses and securities, which by
their nature often carry a higher degree of risk than those that
are not distressed. The Group's businesses are principally engaged
in the provision of goods and services that are dependent on the
continued employment of the Group's employees and availability of
suitable, profitable workload. In the food manufacturing segment,
there is a dependency on a small number of customers and a
reduction in the volume or range of products supplied to those
customers or the loss of any one of them could impact the Group
materially. Rising inflation, including increases in raw materials
and overhead costs, may not be able to be passed on to customers
through increased prices and this could result in reduced
profitability. Any pandemic or other such similar event which could
affect consumers, supplier, customers or staff may limit or inhibit
the Group's operations.
These risks are managed by the Board in conjunction with the
management of the Group's businesses.
More information on the Group's financial risks is disclosed in
note 17.
Energy and carbon reporting
As neither Volvere plc nor any qualifying subsidiaries have
consumed more than 40,000 kWh of energy in this reporting period,
they qualify as low energy users under the regulations and are not
required to report on any emissions, energy consumption or energy
efficient activities.
Statement by the Directors relating to their statutory duties
under s172(1) Companies Act 2006
The Board of Directors considers, both individually and
together, that they have acted in the way they consider, in good
faith, would be most likely to promote the success of the Company
for the benefit of the members as a whole (having regard to the
stakeholders and the matters set out in s172(1)(a-f) of the Act) in
the decisions taken during the year ended 31 December 2022.
The Company is a holding company for which the investing
strategy is approved by members annually at the Company's Annual
General Meeting. The Company's success in following this investing
strategy is measurable in terms of the value arising over time from
the Company's investments.
The Board of Directors had regard, amongst other matters, to
the:
-- likely consequences of any decision on the long term;
-- interests of the Group's employees;
-- need to foster relationships with customers, suppliers and others;
-- impact of the Group's operations on the communities in which
the Group's businesses operate;
-- impact of the Group's operations on the environment;
-- desirability of maintaining a reputation for high standards of business conduct;
-- need to act fairly between the members of the Company.
The broad range of stakeholders and their interests means that
it may not be possible to deliver outcomes that meet all individual
interests. Whilst there is an inherent and probable interdependency
between the success of the Company's underlying investments and the
Company itself over time, there may be occasions where actions in
relation to those investments taken, or not taken, in the interests
of the Company's stakeholders' by the Board could be perceived as,
or be, in conflict with stakeholder interests in the investments
themselves.
The Board engages with the Group's stakeholders both directly
and indirectly at an operational level through the Group's
management responsibility structure. Direct engagement includes
members of the Board communicating with stakeholders personally in
appropriate circumstances. In addition, the Board reviews and
challenges the strategies and financial and operational
performances of its individual trading businesses, including risk
management, legal and regulatory compliance, through periodic
reporting processes and management review meetings. The Company
makes Stock Market announcements whenever required or considered
necessary.
The Board:
-- ensures that any recommendations from relevant regulators are properly considered;
-- assesses risk in the application of capital when making
investment decisions and in making follow-on investments, whether
by way of equity or debt;
-- through its own and its subsidiaries' employment practices
seeks to reward employees fairly and to create a safe and secure
environment;
-- encourages its subsidiaries to maintain regular, open and
honest contact with their customers and suppliers, working
collaboratively;
-- encourages subsidiaries to support charitable activities in
their local communities and to consider the impact of their
operations on the local community;
-- seeks to minimise negative effects of the Company's
operations on the environment by minimising travel and encouraging
its subsidiaries to minimise waste and recycle materials wherever
practicable.
These activities give the Board an overview of stakeholder
engagement and effectiveness, including opportunities to improve
further, and enables the Directors to comply with their legal duty
under s172 of the Companies Act 2006.
Nick Lander
Chief Financial & Operating Officer
25 May 2023
Corporate Governance Report
All members of the Board believe in the value and importance of
good corporate governance and in our accountability to all the
Group's stakeholders, including shareholders, staff, clients and
suppliers. In the statement below, we explain our approach to
governance, and how the Board and its committees operate.
The corporate governance framework which the Group operates,
including Board leadership and effectiveness, Board remuneration,
and internal control is based upon practices which the Board
believes are proportionate to the size, risks, complexity and
operations of the business and is reflective of the Group's values.
We have partially adopted and partially comply with the Quoted
Companies Alliance's ("QCA") Corporate Governance Code for small
and mid-size quoted companies (revised in April 2018 to meet the
requirements of AIM Rule 26).
The QCA Code is constructed around ten broad principles and a
set of disclosures. We have considered how we apply each principle
to the extent that the Board judges these to be appropriate in the
circumstances, and below we provide an explanation of the approach
taken in relation to each. Except as set out below, the Board
considers that it does not depart from any of the principles of the
QCA Code. The information below was last updated on 24 May
2023.
The following paragraphs set out the Group's compliance (or
otherwise) with the ten principles of the QCA Code.
1. Establish a strategy and business model which promote long-term value for shareholders
Explanation
The Company's strategy is to identify and invest in undervalued
and/or distressed businesses and securities as well as businesses
that are complementary to existing Group companies. The Company
provides management services to those businesses.
Since 2002 the Company's shares have been traded on the
Alternative Investment Market ("AIM") of the London Stock Exchange
(ticker VLE).
In order to execute the Company's strategy successfully, the
following key issues are addressed:
Investment Identification - the Company's Executive Directors
are responsible for identifying potential investments. This is done
through maintaining relationships with intermediaries and through
personal networks.
Investment Assessment - the Company's Executive Directors are
responsible for assessing potential investments as a basis for
delivering long-term shareholder value. This is done principally by
undertaking due diligence on such investments, such work being done
largely by the Executive Directors themselves. Where considered
necessary, cost-effective and practicable, external advisers may be
used.
Investment Structuring - the Company's Executive Directors are
responsible for determining the initial investment structure
relating to potential investments. Investments have individual
management teams and risk and reward profiles and the Company puts
in place an investment structure that seeks to balance the risks
and potential rewards for all such stakeholders.
Investment Performance Improvement - the Company's Executive
Directors are responsible for implementing a strategy that improves
the performance of investments (where such investments are not
simply held for treasury purposes). This will typically involve
board leadership and an appropriate level of operational
involvement to ensure that financial and operational risks are
minimised through increased profitability and cash generation. This
is typically done by improving customer service and quality,
clearer financial reporting and control, increasing management
responsibility and target setting.
Investment Exit - the Board is responsible for assessing the
optimum time to exit from an investment. This is determined based
on a range of factors, including the potential divestment
valuation, the nature of any potential acquirer, the external
environment and other stakeholder intentions.
Compliance Departure and Reason - None.
2. Seek to understand and meet shareholder needs and expectations
Explanation
Responsibility for investor relations rests with the CEO,
supported by the CFO. The Company communicates in different ways
with its shareholders to ensure that shareholder needs and
expectations are clearly understood.
Communication with shareholders is principally through the
Annual Report and Accounts, full-year and half-year announcements,
trading updates and the annual general meeting ("AGM"). A range of
corporate information (including all Company announcements) is also
available to shareholders, investors and the public on our website.
The AGM is the principal opportunity for dialogue with private
shareholders, and all Board members seek to attend it and answer
shareholder questions. The Notice of Meeting is sent to
shareholders at least 21 days before the meeting. In addition, the
CEO attends potential investor shows in order to increase the
Company's profile.
Compliance Departure and Reason - None.
3. Take into account wider stakeholder and social
responsibilities and their implications for long-term success
Explanation
The Group's ability to deliver on its strategy is dependent
partly upon its effective engagement with stakeholders and a wider
recognition of the social implications of its operations. In all
businesses, the typical key stakeholders are shareholders,
customers, staff and suppliers.
Customers - in all businesses the Group seeks to provide clients
with products and services that are differentiated from
competitors. This is done through meeting clients to understand
their needs and through understanding competitors' offerings.
Staff - the Group's staff are critical to delivering client
satisfaction over the longer term. All Group companies have in
place staff communication forums and flat management structures,
which aid communication. Group management is accessible to company
staff. In situations where individual subsidiary decisions would
impact on staff security or morale, the relevant company will seek
to minimise the impact on staff.
Suppliers - to varying degrees the Group is dependent upon the
reliable and efficient service of its supply chain. In the case of
significant suppliers, each Group company will meet periodically
with them to review and determine future trading arrangements and
to share the relevant company's requirements of that supplier.
Compliance Departure and Reason - None.
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
Explanation
Recognising and managing business risks is key to ensuring the
delivery of strategy and the creation of long-term shareholder
value.
As part of the Group's annual reporting to shareholders,
specific financial risks are evaluated, including those related to
foreign currency, interest rates, liquidity and credit. The Group's
key risks are set out in the Annual Report & Accounts.
The nature of the Group's operations is such that individual
companies are organised independently and operate business and IT
systems that are appropriate to their individual businesses. The
Audit Committee reviews the findings of the Group's auditors and
considers whether there are remedial actions necessary to improve
the control environment in each company.
The Group has in place an Anti-Bribery Policy and a Share
Dealing Code that apply to staff.
Compliance Departure and Reason - None.
5. Maintain the Board as a well-functioning, balanced team led by the Chair
Explanation
Board members have a collective responsibility and legal
obligation to promote the interests of the Company and are
collectively responsible for defining corporate governance
arrangements. Ultimate responsibility for the quality of, and
approach to, corporate governance lies with the chair of the
Board.
The Board consists of three directors of which two are executive
and one (the Chairman) is non-executive. The Chairman is considered
independent and independent directors will stand for re-election on
an annual basis in the event of having more than 10 years
continuous board service. The QCA Code requires that the Company
has two non-executive directors.
The Board is supported by both Audit and Remuneration
committees, the member of each of which is the Chairman.
The Board meets formally on a regular basis (typically 4-6 times
per annum), with interim meetings convened on an as-required basis.
The Audit committee undertakes an annual review and the
Remuneration committee undertakes reviews on an as-required basis.
All Directors commit the required time to meet the needs of the
Group from time-to-time.
Compliance Departure and Reason - As currently constituted the
Board includes only one non-executive Director. The Board considers
that the size of the Group does not merit the appointment of an
additional non-executive Director but will continue to review this
over time.
6. Ensure that between them the Directors have the necessary
up-to-date experience, skills and capabilities
Explanation
The Company's Directors are David Buchler (Chairman), Jonathan
Lander (CEO) and Nick Lander (COO/CFO). All members of the Board
have experience relevant to delivering the Company's strategy.
The Board believes that, as currently constituted, it has a
blend of relevant experience, skills and personal qualities to
enable it to successfully execute its strategy.
The Directors' biographies are in the Annual Report and Accounts
and incorporated here by reference.
Compliance Departure and Reason - The QCA Code requires, inter
alia, that the Company describes the relevant experience, skills,
personal qualities and capabilities that each Director brings to
the Board. The Board believes the individual's biography as noted
above, coupled with their successful service to date with the
Company, is sufficiently objective evidence that the Board has the
necessary requirements to fulfil their roles individually and
collectively.
7. Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
Explanation
The Board does not formally review the effectiveness of itself
as a unit nor of the Remuneration and Audit committees. The small
size of the Board means that individual Directors' contributions
are transparent. Where the Company identifies potential Board
members, these are noted for any possible future vacancies as part
of succession planning or to bring in additional skills or
capabilities.
Compliance Departure and Reason - Where the need for Board
changes has become evident in the past, the necessary changes have
been implemented. It is not considered necessary to formally review
performance given this embedded approach, whereby review of
effectiveness is continuous.
8. Promote a corporate culture that is based on ethical values and behaviours
Explanation
The nature of the Group's businesses are diverse and, by their
nature, may have different cultures and values relevant to their
sector. However, there are some core values that the Group adopts
throughout all its businesses, irrespective of their nature and
size.
These values are: honesty, integrity, openness and respect. The
Board leads by example, demonstrating through its collective
actions and individually as Directors through theirs, to local
management teams and staff. The Company has an Anti-bribery Policy
and makes an annual Modern Slavery statement.
Compliance Departure and Reason - None.
9. Maintain governance structures and processes that are fit for
purpose and support good decision-making by the Board
Explanation
The Board provides strategic leadership for the Group and
operates within the scope of a robust corporate governance
framework. Its purpose is to ensure the delivery of long-term
shareholder value, which involves setting the culture, values and
practices that operate throughout the Group's businesses as well as
defining its strategic goals. The Board has approved terms of
reference for its Audit and Remuneration committees to which
certain responsibilities are delegated.
The individual roles and responsibilities of the Board, the
Board members and the Audit and Remuneration Committees are set out
below.
Role and Responsibilities of The Chairman is independent and from an external perspective, engages
Chairman with shareholders at
the Company's Annual General Meeting to reinforce the fact that the Board
is being run with
the appropriate level of engagement and time commitment. From an internal
perspective, he
ensures that the information which flows within the Board and its sub
committees is accurate,
relevant and timely and that meetings concentrate on key operational and
financial issues
which have a strategic bias, together with monitoring implementation
plans surrounding commercial
objectives.
In relation to corporate governance, his responsibility is to lead the
Board effectively and
to oversee the adoption, delivery and communication of the Company's
corporate governance
model. He also aims to foster a positive governance culture throughout
the Company working
through the CEO and COO/CFO.
Roles and Responsibilities of CEO The CEO is responsible for recommending and ensuring effective delivery
of the Group's strategy
and achieving financial performance commensurate with that strategy.
The CEO works with the Chairman and COO/CFO in an open and transparent
way and keeps them
up to date with matters of importance and relevance to delivering the
strategy.
--------------------------------------------------------------------------
Roles and Responsibilities of The COO/CFO is responsible for the operational aspects of the Group's
COO/CFO businesses and for maintaining
a robust financial control and reporting environment throughout.
--------------------------------------------------------------------------
Role of the Board The Board of a company is responsible for setting the vision and strategy
for the Company
to deliver value to its shareholders by effectively putting in place its
business model. The
Board members are collectively responsible for defining corporate
governance arrangements
to achieve this purpose, under clear leadership by the Chairman.
-------------------------------------------------------------------------- ---
The Board is authorised to
manage the business of the
Company on behalf of its shareholders
and in accordance with the
Company's Articles of Association.
The Board is responsible for
overseeing the management
of the business and for ensuring
high standards of corporate
governance are maintained
throughout the Group.
The Board meets several times
a year and at other times
as necessary, to discuss a
formal schedule of matters
specifically reserved for
its decision.
These matters routinely include:
* Group strategy and associated risks
* Financial performance of the Group's businesses and
approval of annual budgets, the half year results,
annual report and accounts and dividends
* Changes relating to the Group's capital structure or
share buy-backs
* Appointments to and removal from the Board and
Committees of the Board given the absence of a
separate nomination committee
* Acquisitions, disposals and other material
transactions
* Actual or potential conflicts of interest relating to
any Director are routinely identified at all Board
discussions
----------------------------------------------------------------------------
Role of Audit Committee The Audit Committee provides
confidence to shareholders
on the integrity of the financial
results of the Company expressed
in the Annual Report and Accounts
and other relevant public
announcements of the Company.
The Audit Committee challenges
both the external auditors
and the management of the
Company. It keeps the need
for internal audit under review.
It is responsible for the
assessing recommendations
to the Board on the engagement
of auditors including tendering
and the approval of non-audit
services, for reviewing the
conduct and control of the
annual audit and for reviewing
the operation of the internal
financial controls.
It also has responsibility
for reviewing financial statements
prior to publication and reporting
to the Board on any significant
reporting issues, estimates
and judgements made in connection
with the preparation of the
Company's financial statements.
The Audit Committee, in conjunction
with the rest of the Board,
also has a key role in the
oversight of the effectiveness
of the risk management and
internal control systems of
the Company.
Members: David Buchler
----------------------------------------------------------------------------
Role of Remuneration It is the role of the Remuneration
Committee Committee to ensure that remuneration
arrangements are aligned to
support the implementation
of Company strategy and effective
risk management for the medium
to long-term, and to take
into account the views of
shareholders.
The Company's remuneration
policy has been designed to
ensure that it encourages
and rewards the right behaviours,
values and culture.
The Remuneration Committee
reviews the performance of
the executive directors, sets
the scale and structure of
their remuneration and the
basis of their service agreements
with due regard to the interests
of shareholders and reviews
and approves any proposed
bonus entitlement. It also
determines the allocation
of share options to employees.
Members: David Buchler
----------------------------------------------------------------------------
The Board has approved the adoption of the QCA Code as its
governance framework against which this statement has been prepared
and will monitor the suitability of this code on an annual basis
and revise its governance framework as appropriate as the Group
evolves. The Board is satisfied that the current framework will
evolve in line with the current growth plans of the Group.
Compliance Departure and Reason - None.
10. Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders
Explanation
A healthy dialogue should exist between the Board and all of its
stakeholders, including shareholders, to enable all interested
parties to come to informed decisions about the Company. In
particular, appropriate communication and reporting structures
should exist between the Board and all constituent parts of its
shareholder base. This will assist:
-- the communication of shareholders' views to the Board; and
-- the shareholders' understanding of the unique circumstances
and constraints faced by the Company. It should be clear where
these communication practices are described (annual report or
website).
The Group's Annual Report and Accounts and other
governance-related material, along with notices of all general
meetings over the last five years (as a minimum) are accessible via
the Company's website.
Audit Committee Report - the Audit Committee's annual meeting is
minuted. All matters raised by the Group's auditors are carefully
considered and actions implemented where considered appropriate.
The approach and role of the Audit Committee is noted in section 9
above.
Remuneration Committee Report - the Remuneration Committee's
meetings are minuted. The remuneration of the Board is set out in
the Annual Report and Accounts. The approach and role of the
Remuneration Committee is noted in section 9 above.
Compliance Departure and Reason - The Audit Committee and
Remuneration Committee have not prepared formal reports as required
by the Code. Given the small size of the Board, such formal
reporting is not considered necessary.
Consolidated income statement for the year ended 31 December
2022
Note As restated
2021
2022
GBP'000 GBP'000
Continuing operations
Revenue 5 38,027 30,701
Cost of sales (31,921) (25,388)
Gross profit 6,106 5,313
Distribution costs (2,181) (1,993)
Administrative expenses (2,174) (2,110)
Operating profit 2 1,751 1,210
Finance expense 7 (138) (137)
Finance income 7 698 -
Profit on sale of tangible fixed
assets 18 -
Profit before tax 2,329 1,073
Income tax credit 8 - 61
Profit for the year from continuing
operations 2,329 1,134
Loss for the year from discontinued
operations 6 (2,391) (1,079)
(Loss)/profit for the year (62) 55
Attributable to:
- Equity holders of the parent (537) (299)
- Non-controlling interests 475 354
(62) 55
Earnings/(loss) per share 9
Basic and diluted
- from continuing operations 74.36p 30.36p
- from discontinued operations (95.89)p (41.97)p
Total (21.53)p (11.61)p
Consolidated statement of comprehensive income for the year
ended 31 December 2022
As restated
2022 2021
GBP'000 GBP'000
(Loss)/profit for the year (62) 55
Other comprehensive income
Revaluation of freehold land and buildings 1,188 -
Revaluation of available for sale investments (36) -
Deferred tax recognised directly in equity (297) (140)
Total comprehensive income for the year 793 (85)
Attributable to:
- Equity holders of the parent 318 (411)
- Non-controlling interests 475 326
793 (85)
Consolidated statement of changes in equity
Share Share Revaluation Retained Non-controlling
capital premium reserve earnings Total interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2022
Loss for the year - - - (537) (537) 475 (62)
Revaluation of property - - 1,188 - 1,188 - 1,188
Revaluation of available
for sale investments - - - (36) (36) - (36)
Deferred tax recognised
directly in equity - - (297) - (297) - (297)
Total comprehensive
income for the year 891 (573) 318 475 793
Balance at 1 January 50 7,885 827 25,886 34,648 2,402 37,050
Transactions with
owners:
Purchase of own
treasury shares - - - (2,091) (2,091) - (2,091)
Total transactions
with owners - - - (2,091) (2,091) - (2,091)
Balance at 31 December 50 7,885 1,718 23,222 32,875 2,877 35,752
Share Share Revaluation Retained Non-controlling
capital premium reserves earnings Total interests Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
2021
Loss for the year - - - (299) (299) 354 55
Revaluation of property - - (112) - (112) (28) (140)
Total comprehensive
income for the year - - (112) (299) (411) 326 (85)
Balance at 1 January 50 7,885 939 26,229 35,103 2,076 37,179
Transactions with
owners:
Purchase of own
treasury shares - - - (44) (44) - (44)
Total transactions
with owners - - - (44) (44) - (44)
Balance at 31 December 50 7,885 827 25,886 34,648 2,402 37,050
Consolidated statement of financial position
2022 2021
Note GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 11 8,142 9,306
Total non-current assets 8,142 9,306
Current assets
Inventories 12 3,777 4,384
Trade and other receivables 13 9,315 8,874
Cash and cash equivalents 14 19,136 21,871
Assets held for sale 15 2,103 -
Available for sale investments 16 1,649 -
Total current assets 35,980 35,129
Total assets 44,122 44,435
Liabilities
Current liabilities
Loans and other borrowings 19 (1,258) (1,452)
Leases 19 (372) (392)
Trade and other payables 17 (4,807) (3,379)
Total current liabilities (6,437) (5,223)
Non-current liabilities
Loans and other borrowings 19 (818) (933)
Leases 19 (452) (691)
Total non-current liabilities (1,270) (1,624)
Total liabilities (7,707) (6,847)
Provisions - deferred tax 20 (663) (538)
Net assets 35,752 37,050
Equity
Share capital 21 50 50
Share premium account 22 7,885 7,885
Revaluation reserves 22 1,718 827
Retained earnings 22 23,222 25,886
Capital and reserves attributable
to equity holders of the Company 32,875 34,648
Non-controlling interests 25 2,877 2,402
Total equity 35,752 37,050
Consolidated statement of cash flows for the year ended 31
December 2022
As restated As restated
2022 2022 2021 2021
Note GBP'000 GBP'000 GBP'000 GBP'000
Profit/(loss) for the year (62) 55
Adjustments for:
Finance expense 7 138 137
Finance income 7 (698) -
Depreciation 11 933 922
Operating lease rentals (14) (13)
Income tax expense/(credit) 8 - (61)
(Gain)/loss on disposal of fixed assets (18) -
Loss from discontinued operations 2,391 1,079
2,732 2,064
Operating cash flows before movements in working
capital 2,670 2,119
Increase in trade and other receivables (1,116) (1,498)
Increase in trade and other payables 1,126 (53)
Increase in inventories 291 (372)
Operating cash generated from continuing
operations 2,971 196
Operating cash flows used by discontinued operations (1,051) (955)
Net cash generated from/(used by) operations 1,920 (759)
Investing activities
Interest received 7 8 -
Income from investments 109 -
Purchase of property, plant and equipment 11 (889) (270)
Sale of property, plant, equipment 42 -
Purchase of available for sale investments (6,886) -
Disposal of available for sale investments 5,782 -
Cash used by continuing investing activities (1,834) (270)
Cash generated from/(used by) discontinued investing
activities 29 (197)
Net cash used by investing activities
(1,805) (467)
Financing activities
Interest paid 7 (132) (130)
Purchase of own shares (treasury shares) 21 (2,090) (44)
Net (repayment) of borrowings (577) (391)
Cash used by continuing financing activities (2,799) (565)
Cash used by discontinued financing activities (51) (49)
Net cash used by financing activities (2,850) (614)
Net (decrease)/increase in cash (2,735) (1,840)
Cash at beginning of year 21,871 23,711
Cash at end of year 19,136 21,871
Notes forming part of the final results
1 Accounting policies
The financial information set out above, which was approved by
the Board on 24 May 2023, is derived from the full Group accounts
for the year ended 31 December 2022 and does not constitute the
statutory accounts within the meaning of section 434 of the
Companies Act 2006. The Group accounts on which the auditors have
given an unqualified report, which does not contain a statement
under section 498(2) or (3) of the Companies Act 2006 in respect of
the accounts for 2022, will be delivered to the Registrar of
Companies in due course. Copies of the Company's Annual Report and
Financial Statements are expected to be sent to shareholders on 31
May 2023 and will be available online at www.volvere.co.uk.
Basis of accounting
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS and IFRIC
interpretations) as adopted by the United Kingdom ("adopted IFRS")
and with those parts of the Companies Act 2006 applicable to
companies preparing their accounts under adopted IFRS.
The following principal accounting policies have been applied
consistently, in all material respects, in the preparation of these
financial statements:
Going concern
The Group's business activities, together with the factors
likely to affect its future development, performance and position
are set out in the Strategic Report. In addition, note 18 to the
financial statements includes the Group's objectives, policies and
processes for managing its capital; its financial risk management
objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity
risk.
The Group has considerable financial resources and, as a
consequence, the Directors believe that the Group is well placed to
manage the business risks inherent in its activities despite the
current uncertain economic outlook.
The Directors have a reasonable expectation that the Group has
adequate resources to enable it to continue in operational
existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the annual
financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December each year. Control is
achieved where the Company has the power to govern the financial
and operating policies of an investee entity so as to obtain
benefits from its activities. All subsidiaries have a reporting
date of 31 December.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated income statement from the
effective date of acquisition or up to the effective date of
disposal, as appropriate. All intra-group transactions, balances,
income and expenses are eliminated on consolidation.
Non-controlling interests, presented as part of equity,
represent the portion of a subsidiary's profit or loss and net
assets that is not held by the Group. The Group attributes total
comprehensive income or loss of subsidiaries between the owners of
the parent and the non-controlling interests based on their
respective ownership interests.
The results and net assets of subsidiaries whose accounts are
denominated in foreign currencies are retranslated into Sterling at
average and year-end rates respectively.
Business combinations
The Group applies the acquisition method of accounting for
business combinations. The consideration transferred by the Group
to obtain control of a subsidiary is calculated as the sum of the
acquisition-date fair values of assets transferred, liabilities
incurred and equity interests issued by the Group, which includes
the fair value of any asset or liability arising from a contingent
consideration arrangement. Acquisition costs are expensed as
incurred.
The Group recognises identifiable assets acquired and
liabilities assumed in a business combination regardless of whether
they have been previously recognised in the acquiree's financial
statements prior to the acquisition. Assets acquired and
liabilities assumed are measured at their acquisition-date fair
values.
Goodwill is stated after separate recognition of identifiable
intangible assets. It is calculated as the excess of the sum of the
fair value of consideration transferred, the recognised amount of
any non-controlling interest in the acquiree and the
acquisition-date fair value of any existing equity interest in the
acquiree, over the acquisition-date fair values of identifiable net
assets. If the fair values of identifiable net assets exceed the
sum calculated above, the excess amount (i.e. gain on a bargain
purchase) is recognised in profit or loss immediately.
The purchase of a non-controlling interest is not a business
combination within the scope of IFRS 3, since the acquiree is
already controlled by its parent. Such transactions are accounted
for as equity transactions, as they are transactions with equity
holders acting in their capacity as such. No change in goodwill is
recognised and no gain or loss is recognised in profit or loss.
Goodwill
Goodwill represents the future economic benefits arising from a
business combination that are not individually identified and
separately recognised. See above for information on how goodwill is
initially determined. Goodwill is carried at cost less accumulated
impairment losses and is reviewed annually for impairment.
Revenue recognition
Revenue from contracts with customers is recognised when control
of the goods or services is transferred to the customer at an
amount that reflects the consideration to which the group expects
to be entitled in exchange for those goods or services net of
discounts, VAT and other sales-related taxes. The group concludes
that it is the principal in its revenue arrangements, because it
typically controls the goods or services before transferring them
to the customer. Payment is typically due within 60 days. Contracts
with customers do not contain a financing component or any element
of variable consideration. The group does not offer an option to
purchase a warranty.
Revenue from the sale of goods is recognised at the point in
time when control of the asset is transferred to the customer,
generally when the customer has taken undisputed delivery of the
goods. There are no service obligations attached to the sale of
goods. Customer rebates are deducted from revenue.
If it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised immediately in
profit or loss.
Discontinued operations
Discontinued operations represent cash generating units or
groups of cash generating units that have either been disposed of
or classified as held for sale and represent a separate major line
of business or are part of a single co-ordinated plan to dispose of
a separate major line of business. Cash generating units forming
part of a single co-ordinated plan to dispose of a separate major
line of business are classified within continuing operations until
they meet the criteria to be held for sale. The post-tax profit or
loss of the discontinued operation is presented as a single line on
the face of the consolidated income statement, together with any
post-tax gain or loss recognised on the re-measurement to fair
value less costs to sell or on the disposal of the assets or
disposal group constituting the discontinued operation. On changes
to the composition of groups of units comprising discontinued
operations, the presentation of discontinued operations within
prior periods is restated to reflect consistent classification of
discontinued operations across all periods presented.
Operating segments
IFRS 8 "Operating Segments" requires the disclosure of segmental
information for the Group on the basis of information reported
internally to the chief operating decision-maker for
decision-making purposes. The Group considers that the role of
chief operating decision-maker is performed collectively by the
Board of Directors.
Volvere plc is a holding company that identifies and invests
principally in undervalued and distressed businesses and securities
as well as businesses that are complementary to existing Group
companies. Its customers are based primarily in the UK and
Europe.
Financial information (including revenue and profit before tax
and intra-group charges) is reported to the Board on a segmental
basis. Segment revenue comprises sales to external customers and
excludes gains arising on the disposal of assets and finance
income. Segment profit reported to the Board represents the profit
earned by each segment before tax and intra-group charges. For the
purposes of assessing segment performance and for determining the
allocation of resources between segments, the Board reviews the
non-current assets attributable to each segment as well as the
financial resources available. All assets are allocated to
reportable segments. Assets that are used jointly by segments are
allocated to the individual segments on a basis of revenues
earned.
All liabilities are allocated to individual segments.
Information is reported to the Board of Directors on a segmental
basis as management believes that each segment exposes the Group to
differing levels of risk and rewards due to their varying business
life cycles. The segment profit or loss, segment assets and segment
liabilities are measured on the same basis as amounts recognised in
the financial statements. Each segment is managed separately.
Where one company within a segment incurs costs which relate
wholly or partly to, or shares resources with, another company
within that or another segment, a proportion of such costs are
recharged to that other company. The effect is to reduce the costs
of the incurring company and to increase the costs of the
benefitting company.
Leasing
The Company applies IFRS 16 Leases. Accordingly leases are all
accounted for in the same manner:
- A right of use asset and lease liability is recognised on the
statement of financial position, initially measured at the present
value of future lease payments;
- Depreciation of right-of-use assets and interest on lease
liabilities are recognised in the statement of comprehensive
income;
- The total amount of cash paid is recognised in the statement
of cash flows, split between payments of principal (within
financing activities) and interest (also within financing
activities)
The initial measurement of the right of use asset and lease
liability takes into account the value of lease incentives such as
rent free periods.
The costs of leases of low value items and those with a short
term at inception are recognised as incurred.
Foreign currencies
Transactions in currencies other than sterling are recorded at
the rates of exchange prevailing on the dates of the transactions.
At each reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing on the reporting date. Gains and losses arising on
retranslation are included in net profit or loss for the
period.
Retirement benefit costs
The Group's subsidiary undertakings operate defined contribution
retirement benefit schemes. Payments to these schemes are charged
as an expense in the period to which they relate. The assets of the
schemes are held separately from those of the relevant company and
Group in independently administered funds.
Taxation
The tax expense represents the sum of the tax currently payable
and deferred tax. The tax currently payable is based on taxable
profit for the year. Taxable profit differs from net profit as
reported in the income statement because it excludes items of
income or expense that are taxable or deductible in other years and
it further excludes items that are never taxable or deductible.
Deferred tax is the tax expected to be payable or recoverable on
temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax
bases used in the computation of taxable profit, and is accounted
for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against
which deductible temporary differences can be utilised. Such assets
and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than in
a business combination) of other assets and liabilities in a
transaction that affects neither the tax profit nor the accounting
profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group is able to
control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable
future.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is measured on an undiscounted basis using the tax
rates that are expected to apply in the period when the liability
is settled or the asset is realised. Deferred tax is charged or
credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred
tax is also dealt with in equity.
Property, plant and equipment
Items of property, plant and equipment are stated at cost or
valuation less accumulated depreciation and any recognised
impairment loss. Freehold property is revalued on a periodic basis.
Depreciation is charged so as to write off the cost or valuation of
assets, less their residual values, over their estimated useful
lives, using the straight line method, on the following bases:
Freehold property - 1.5% per annum
Plant and machinery - 4%-33% per annum
Investments
Investments are recognised and derecognised on a trade date
where a purchase or sale of an investment is under a contract whose
terms require delivery of the investment within the timeframe
established by the market concerned, and are initially measured at
fair value, including transaction costs. Available for sale current
asset investments are carried at fair value with adjustments
recognised in other comprehensive income.
Investment income
Income from investments is included in the income statement at
the point the Group becomes legally entitled to it. Interest income
and expenses are reported on an accruals basis using the effective
interest method.
Impairment of property, plant and equipment and intangible
assets (including goodwill)
At each reporting date the Group reviews the carrying amounts of
its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of
the time value of money and any risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a
revaluation decrease.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised as income immediately, unless
the relevant asset is carried at a revalued amount, in which case
the reversal of the impairment loss is treated as a revaluation
increase.
Share-based payments
The Group issues equity-settled share-based payments to certain
directors and employees. Equity-settled share-based payments are
measured at fair value at the date of grant. The fair value
determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting
period, based on the Group's estimate of options that will
ultimately vest.
Fair value is measured by use of a Black-Scholes pricing model.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Raw materials are valued at purchase price and the costs of
ordinarily interchangeable items are assigned using a weighted
average cost formula. The cost of finished goods comprises raw
materials directly attributable to manufacturing processes based on
product specification and packaging cost. Net realisable value is
the estimated selling price in the ordinary course of business less
any applicable selling expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, overnight
deposits and treasury deposits. The Group considers all highly
liquid investments with original maturity dates of three months or
less to be cash equivalents.
Financial assets
Recognition and derecognition
Financial assets and financial instruments are recognised when
the Group becomes a party to the contractual provisions of the
financial asset.
Financial assets are derecognised when the contractual rights to
the cash flows from the financial assets expire, or when the
financial asset and substantially all of the risks and rewards are
transferred. A financial liability is derecognised when it is
extinguished, discharged, cancelled or expires.
Classification and initial recognition of financial assets
Except for trade receivables that do not contain a significant
financing component and are measured at the transaction price in
accordance with IFRS 15, all financial assets are initially
measured at fair value adjusted for transaction costs (where
applicable).
Financial asset, other than those designated and effective as
hedging instruments are classified into the following
categories:
- Amortised cost
- Fair value through profit or loss (FVTPL)
- Fair value through other comprehensive income (FVOCI)
The classification is determined by both:
- The entity's business model for managing the financial asset
- The contractual cash flow characteristics of the financial asset
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within finance costs,
finance income or other financial items, except for impairment of
trade receivables which is presented within administrative
expenses.
Subsequent measurement of financial assets
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated as
FVTPL):
- They are held within a business model whose objective is to
hold the financial assets and collect its contractual cash
flows
- The contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
its effect is immaterial. The Group's cash and cash equivalents,
trade and most other receivables fall into this category. This
category also includes investments in equity instruments.
Financial assets which are designated as FVTPL are measured at
fair value with gains or losses recognised in profit or loss. The
fair values of financial assets in this category are determined
with reference to active market transactions or using a valuation
technique where no active market exists.
Impairment of financial assets
IFRS 9's impairment requirements use forward looking information
to recognise expected credit losses - the 'expected credit loss
(ECL) method'. Recognition of credit losses is no longer dependent
on first identifying a credit loss event, but considers a broader
range of information in assessing credit risk and credit losses
including past events, current conditions, reasonable and
supportable forecasts that affect the expected collectability of
the future cash flows of the instrument.
In applying this forward looking approach, a distinction is made
between:
- Financial instruments that have not deteriorated significantly
in credit quality since initial recognition or that have low credit
risk ('stage 1') and
- Financial instruments that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is
not low ('stage 2').
Stage 3 would cover financial assets that have objective
evidence of impairment at the reporting date.
12 month expected credit losses are recognised for the first
category while lifetime expected credit losses are recognised for
the second category. Measurement of the expected credit losses is
determined by a probability-weighted estimate of credit losses over
the expected life of the financial asset.
Trade and other receivables and contract assets
The group makes use of a simplified approach in accounting for
trade and other receivables as well as contract assets and records
the loss allowance as lifetime expected credit losses. These are
the expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial
instrument. In calculating, the Group uses its historical
experience, external indicators and forward-looking information to
calculate the expected credit losses using a provision matrix.
The Group assesses impairment of trade receivables on a
collective basis, as they possess shared credit risk
characteristics, they have been grouped based on the days past
due.
Classification and measurement of financial liabilities
FVTPL: This category comprises only out-of-the-money
derivatives. They are carried in the statement of financial
position at fair value with changes in fair value recognised in the
income statement.
Other financial liabilities: Other financial liabilities include
trade payables and other short-term monetary liabilities, which are
initially recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
Bank and other borrowings are initially recognised at the fair
value of the amount advanced net of any transaction costs directly
attributable to the issue of the instrument. Such interest bearing
liabilities are subsequently measured at amortised cost using the
effective interest method. Interest expense in this context
includes initial transaction costs and premia payable on
redemption, as well as any interest or coupon payable while the
liability is outstanding.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
Invoice discounting
The Group uses an invoice discounting facility and retains all
significant benefits and risks relating to the relevant trade
receivables. The gross amounts of the receivables are included
within assets and a corresponding liability in respect of proceeds
received from the facility is included within liabilities. The
interest and charges are recognised as they accrue and are included
in the income statement with other interest charges.
Significant management judgements and key sources of estimation
uncertainty
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and reported
amounts of assets and liabilities, income and expenses. The nature
of the Group's business is such that there can be unpredictable
variation and uncertainty regarding its business. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
Significant management judgements (other than estimates)
The judgements that have a significant impact on the carrying
value of assets and liabilities are discussed below:
Consolidation
Management have concluded that it is not appropriate to utilise
the exemption from consolidation available to investment entities
under IFRS 10 as the Company is not considered to meet all of the
essential elements of the definition of an investment entity as
performance is not measured or evaluated on a fair value basis.
Accordingly the consolidation includes all entities which the
Company controls.
Deferred tax asset
The Group recognises a deferred tax asset in respect of
temporary differences relating to capital allowances, revenue
losses and other short term temporary differences when it considers
there is sufficient evidence that the asset will be recovered
against future taxable profits.
This requires management to make decisions on such deferred tax
assets based on future forecasts of taxable profits. If these
forecast profits do not materialise, or there is a change in the
tax rates or to the period over which temporary timing differences
might be recognised, the value of the deferred tax asset will need
to be revised in a future period.
The most sensitive area of estimation risk is with respect to
losses. The Group has losses for which no value has been recognised
for deferred tax purposes in these financial statements, as future
economic benefit of these temporary differences is not probable. If
appropriate profits are earned in the future, recognition of the
benefit of these losses may result in a reduced tax charge in a
future period.
Significant estimates
Information about estimates and assumptions that have the most
significant effect on recognition and measurement of assets,
liabilities, income and expenses is provided below. Actual results
may be substantially different.
Useful lives of depreciable assets
The depreciation charge for an asset is derived using estimates
of its expected useful life and expected residual value, which are
reviewed annually. Increasing an asset's expected life or residual
value would result in a reduced depreciation charge in the
consolidated income statement.
Management determines the useful lives and residual values for
assets when they are acquired, based on experience with similar
assets and taking into account other relevant factors such as any
expected changes in technology or regulations.
Inventories
In determining the cost of inventories management has to make
estimates to arrive at cost and net realisable value.
Furthermore, determining the net realisable value of the wider
range of products held requires judgement to be applied to
determine the saleability of the product and estimations of the
potential price that can be achieved. In arriving at any provisions
for net realisable value management take into account the age,
condition and quality of the product stocked and the recent sales
trend. The future realisation of these inventories may be affected
by market-driven changes that may reduce future selling prices.
Fair value measurement
Management uses valuation techniques to determine the fair value
of financial instruments (where active market quotes are not
available) and non-financial assets. This involves developing
estimates and assumptions consistent with how market participants
would price the instrument. Management bases its assumptions on
observable data as far as possible but this is not always
available. In that case management uses the best information
available. Estimated fair values may vary from the actual prices
that would be achieved in an arm's length transaction at the
reporting date.
Recognition and calculation of right of use assets
Management assesses the discount rate to be applied to the
leases held on an annual basis. They ensure the discount rate is in
line with market rate.
New and revised standards and interpretations applied
The following amendments are effective for the period beginning
1 January 2022:
-- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);
-- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS
16);
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9,
IFRS 16 and IAS 41); and
-- References to Conceptual Framework (Amendments to IFRS 3).
None of these had an impact on the Group.
New and revised Standards and Interpretations in issue but not
yet effective
At the date of authorisation of these financial statements, the
Company has not early adopted the following amendments to Standards
and Interpretations that have been issued but are not yet effective
and have not been adopted early by the Group.
The following amendments are effective for the period beginning
1 January 2023:
-- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
-- Definition of Accounting Estimates (Amendments to IAS 8); and
-- Deferred Tax Related to Assets and Liabilities arising from a
Single Transaction (Amendments to IAS 12).
The following amendments are effective for the period beginning
1 January 2024:
-- IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback)
-- IAS 1 Presentation of Financial Statements (Amendment -
Classification of Liabilities as Current or Non-current)
-- IAS 1 Presentation of Financial Statements (Amendment -
Non-current Liabilities with Covenants)
As yet, none of these have been endorsed for use in the UK and
will not be adopted until such time as endorsement is confirmed.
The Directors do not expect any material impact as a result of
adopting the standards and amendments listed above in the financial
year they become effective.
2 Operating profit
Operating profit is stated after charging:
2022 2021
GBP'000 GBP'000
(as restated)
Staff costs 6,038 5,420
Depreciation of property, plant and equipment 933 922
Auditor's fees - audit services 42 38
The analysis of audit fees is as follows:
- for the audit of the Company's annual accounts 10 9
- for the audit of the Company's subsidiaries'
accounts 32 29
42 38
3 Staff costs
Staff costs comprise:
2022 2021
GBP'000 GBP'000
(as restated)
Wages and salaries 5,443 4,885
Employer's National Insurance contributions 448 394
Defined contribution pension cost 147 141
6,038 5,420
The average number of employees (including Directors) in the
Group was as follows:
2022 2021
Number Number
(as restated)
Engineering, production and professional 181 166
Sales and marketing 11 10
Administration and management 34 33
226 209
4 Directors' remuneration
The remuneration of the Directors was as follows:
Salaries Other
& fees benefits Total
2022 2022 2022
GBP'000 GBP'000 GBP'000
David Buchler 45 - 45
Jonathan Lander 10 - 10
Nick Lander 9 1 10
64 1 65
Salaries Other
& fees benefits Total
2021 2021 2021
GBP'000 GBP'000 GBP'000
David Buchler 45 - 45
Jonathan Lander 11 - 11
Nick Lander 11 1 12
67 1 68
The services of Jonathan Lander and Nick Lander are provided
under the terms of a Service Agreement with D2L Partners LLP. The
amount due under these agreements, which is in addition to the
amounts disclosed above, for the year amounted to GBP650,000 (2021:
GBP650,000). Amounts owed to D2L Partners LLP at the year end
totalled GBPnil (2021: GBPnil).
The amount paid to David Buchler in the year was paid to DB
Consultants Limited (which is controlled by him and is therefore a
related party) and the amount outstanding at the year end was
GBPnil (2021: GBPnil).
N one of the Directors were members of the Group's defined
contribution pension plan in the year (2021: none).
5 Operating segments
Analysis by business segment:
An analysis of key financial data by business segment is
provided below. The Group's food manufacturing segment is engaged
in the production and sale of food products to third party
customers, and the investing and management services segment incurs
central costs, provides management services and financing to other
Group segments and undertakes treasury management on behalf of the
Group. A more detailed description of the activities of each
segment is given in the Strategic Report.
Investing and management services
Food manufacturing 2022
2022 GBP'000 Total
GBP'000 2022
GBP'000
Revenue 38,027 - 38,027
Profit/(loss) before tax(1) 2,777 (448) 2,329
Investing and management services
Food manufacturing 2021
2021 GBP'000 Total
GBP'000 2021
(as restated) GBP'000
(as restated)
Revenue 30,701 - 30,701
Profit/(loss) before tax(1) 2,139 (1,066) 1,073
Investing and management services
Food manufacturing 2022
2022 GBP'000 Total
GBP'000 2022
GBP'000
Assets 25,692 18,430 44,122
Liabilities and provisions (8,874) 504 (8,370)
Net assets(2) 16,818 18,934 35,752
Investing and management services
Food manufacturing 2021
2021 GBP'000 Total
GBP'000 2021
GBP'000
Assets 22,929 21,506 44,435
Liabilities and provisions (7,850) 465 (7,385)
Net assets(2) 15,079 21,971 37,050
(1) stated before intra-group management and interest charges
(2) assets and liabilities stated excluding intra-group balances
Continuing operations
Investing and management services
Food manufacturing 2022
2022 GBP'000 Total
GBP'000 2022
GBP'000
Capital spend 1,014 - 1,014
Depreciation 932 1 933
Interest income (non-Group) (8) - (8)
Interest expense (non-Group) 138 - 138
Tax credit/(expense) (50) 50 -
Continuing operations Investing and management services
Food manufacturing 2021
2021 GBP'000 Total
GBP'000 (as restated) 2021
(as restated) GBP'000
(as restated)
Capital spend 270 - 270
Depreciation 921 1 922
Interest income (non-Group) - - -
Interest expense (non-Group) 137 - 137
Tax credit/(expense) (114) 175 61
Geographical analysis:
External revenue Non-current assets
by by
location of customers location of assets
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
(as restated)
UK 36,830 29,612 8,142 9,306
Rest of Europe 1,197 954 - -
USA - 135 - -
38,027 30,701 8,142 9,306
The Group had 4 (2021: 4) customers (all in the food manufacturing
segment) that individually accounted for in excess of 10% of the
Group's revenues as follows:
2022 2021
GBP'000 GBP'000
(as restated)
First customer 17,860 12,122
Second customer 6,252 6,783
Third customer 5,530 3,732
Fourth customer 4,547 3,672
Revenue is recognised when goods are delivered and there is
minimal uncertainty over the timing and amount of revenue
recognition. The Group has no material balances which arise from
contracts with customers save for trade receivables as set out in
note 13.
6 Discontinued operations
On 8 November 2022, two subsidiary undertakings in the Group,
Indulgence Patisserie Limited and Indulgence Foods Limited, ceased
operations and have been classified as assets held for sale.
The loss relating to these subsidiaries (before intra-Group
management charges) in the year was as follows:
2022 2021
GBP'000 GBP'000
Revenue 3,532 4,878
Cost of sales (4,300) (4,294)
Gross (loss)/profit (768) 584
Administrative expenses (1,363) (1,360)
Distribution expenses (237) (230)
Operating loss (2,368) (1,006)
Loss on sale of tangible fixed asset investments (199) -
Loss before tax (2,567) (1,006)
Income tax credit/(expense) 176 (73)
Loss from discontinued operations (2,391) (1,079)
Cash flows generated by Indulgence Patisserie Limited and
Indulgence Foods Limited for the reporting periods under review was
as follows:
2022 2021
GBP'000 GBP'000
Operating activities (1,051) (955)
Investing activities 29 (197)
Financing activities (51) (49)
Cash flows from discontinued operations (1,073) (1,201)
At 31 December 2022, the assets and liabilities of Indulgence
Patisserie Limited and Indulgence Foods Limited (stated net of
intra-Group balances), were as follows:
2022
GBP'000
Non-current assets
Assets held for sale 2,103
Property, plant and equipment 6
Total non-current assets 2,109
Current assets
Inventories 414
Trade and other receivables 826
Cash and cash equivalents 72
Total current assets 1,312
Total assets 3,421
Current liabilities
Loans and other borrowings (6,519)
Leases (5)
Trade and other payables (486)
Total liabilities (7,010)
Provisions - deferred tax (169)
Net liabilities (3,758)
7 Investment revenues, other gains and losses and finance income and expense
2022 2021
GBP'000 GBP'000
Finance income
Bank interest receivable 8 -
Investment revenues 109 -
Other gains & losses 581 -
698 -
Finance expense
Bank interest (41) (42)
Lease interest (44) (47)
Other interest and finance charges (53) (48)
(138) (137)
8 Income tax
2022 2021
GBP'000 GBP'000
(as restated)
Deferred tax credit recognised in income statement
- current year - (61)
Total tax credit recognised in income statement - (61)
Deferred tax expense recognised in equity 297 140
Total deferred tax recognised 297 79
The reasons for the difference between the actual tax expense in
the income statement for the year and the standard rate of
corporation tax in the UK applied to profits for the year are as
follows:
2022 2021
GBP'000 GBP'000
(as restated)
Profit before tax 2,329 1,073
Expected tax charge based on the prevailing rate
of corporation tax in the UK of 19% 443 204
Effects of:
Income not taxed (21) -
Super deduction and capital allowance adjustments (27) 15
Other adjustments 19 18
Losses utilised (8) -
Effect of changes in rate of tax 5 (9)
Group relief from discontinued operations (386) (233)
Adjustments relating to prior periods (25) (56)
Total tax recognised in income statement - (61)
Deferred tax assets and liabilities are recognised at rates of
tax substantively enacted as at the balance sheet date. Deferred
tax assets are recognised to the extent that they are considered
recoverable. See also note 20.
9 Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings for the purposes of earnings per share:
2022 2021
GBP'000 GBP'000
(as restated)
Profit/(loss) attributable to equity holders of the
parent company:
From continuing operations 1,854 780
From discontinued operations (2,391) (1,079)
EEa
Weighted average number of shares for the purposes 2022 2021
of earnings per share: No. No.
Weighted average number of ordinary shares in issue 2,493,592 2,571,132
Dilutive effect of potential ordinary shares - -
Weighted average number of ordinary shares for diluted
EPS 2,493,592 2,571,132
There were no share options (or other dilutive instruments) in
issue during the year or the previous year.
10 Subsidiaries
The subsidiaries of Volvere plc, all of which have been included
in these consolidated financial statements, are as follows:
Proportion
Registered Principal of ownership
Name address Activity interest
in ordinary
shares at
31 December
2022
Volvere Central Services
Limited Note 1 Group support services 100%
NMT Group Limited Note 2 Investment 98.6%
Shire Foods Limited Note 1 Food manufacturing 80%
Impetus Automotive
Solutions Limited Note 1 Dormant 100%
New Medical Technology Note 3 Dissolved on 01/03/2022 98.6%
Limited
Zero-Stik Limited Note 3 Dissolved on 01/03/2022 98.6%
Property holding
Indulgence Foods Limited Note 1 company (Note 4) 100%
Indulgence Patisserie Food Manufacturing,
Limited Note 1 now ceased trading 100%
Naughty Vegan Limited Note 1 Branded food supplier 100%
Volvere Asset Management
Limited Note 1 Dormant 100%
Note 1 - Registered at Shire House, Tachbrook Road, Leamington
Spa, Warwickshire, CV31 3SF, England.
Note 2 - Registered at 4th Floor 115 George Street, Edinburgh,
EH2 4JN, Scotland.
Note 3 - Formerly registered at c/o Wright, Johnston &
Mackenzie LLP, 302 St Vincent St, Glasgow, G2 5RZ, Scotland.
Note 4 - The property owned by this company related solely to
the activities undertaken by Indulgence Patisserie Limited.
11 Property, plant and equipment
Freehold Plant
Property & Machinery Total
GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 January 2021 4,700 9,090 13,790
Additions - 467 467
Disposals - 18 18
Revaluation - (8) (8)
At 31 December 2021 and 1 January 2022 4,700 9,567 14,267
Additions - 1,082 1,082
Disposals - (799) (799)
Revaluation 1,188 - 1,188
Reclassified to asset held for sale (2,138) - (2,138)
At 31 December 2022 3,750 9,850 13,600
Accumulated depreciation
At 1 January 2021 13 3,821 3,834
Charge for the year 72 1,059 1,131
Eliminated on disposal - (4) (4)
At 31 December 2021 and 1 January 2022 85 4,876 4,961
Charge for the year 65 987 1,052
Disposals - (520) (520)
Reclassified to asset held for sale (35) - (35)
At 31 December 2022 115 5,343 5,458
Net book value
At 31 December 2022 3,635 4,507 8,142
At 31 December 2021 4,615 4,691 9,306
The freehold property owned by Shire Foods Limited was revalued
by an independent valuation specialist to GBP3,750,000 in May 2021
and this valuation was included as at 31 December 2020. During
2020, the company acquired freehold properties as part of the
Indulgence business combination. The properties were purchased for
GBP950,000.
In the 2022 financial year, the properties owned by Indulgence
Foods Limited were revalued to GBP2,138,000. Following Indulgence
Patisserie Limited ceasing to trade, these properties were
subsequently reclassified as assets held for sale.
Under the historical cost model, the carrying value of freehold
property would be GBP2,173,700. All other property, plant and
equipment is carried at cost less accumulated depreciation. At the
year end, the Directors consider that the fair value of the
properties is not materially different from their carrying
values.
Management considers there to be no indicators to suggest that
any items of property, plant and equipment are impaired. Property,
plant and equipment (which is all held within Shire Foods Limited)
with a net book value of GBP8.14 million is pledged as collateral
for Group borrowings (all of which are within Shire Foods
Limited).
Right of use assets
The Group leases certain plant and equipment. The average
remaining lease term across all leases is 1.5 years. In all cases,
the lease obligations are secured by the lessor's title to the
leased assets. The right-of-use assets included in the statement of
financial position are as follows:
Amounts recognised in the statement of financial position
Group 2022 2021
GBP'000 GBP'000
Net book values 1,770 1,883
======== ===========
Amounts recognised in the statement of comprehensive income
Group 2022 2021
GBP'000 GBP'000
Interest expense on lease liabilities 44 47
Expense relating to short-term leases - -
Depreciation charge for the year 329 365
======== ========
The aggregate undiscounted commitments for short-term and low
value leases at the year-end was GBPnil (2021 - GBPnil).
12 Inventories
2022 2021
GBP'000 GBP'000
Raw materials 1,961 1,515
Finished products 1,816 2,869
3,777 4,384
The total amount of inventories consumed in the year and charged
to cost of sales was GBP24.62 million (2021: GBP18.73 million).
13 Trade and other receivables
2022 2021
GBP'000 GBP'000
Trade receivables 8,466 8,195
Less: provision for impairment of trade receivables - -
Net trade receivables 8,466 8,195
Other receivables 283 228
Prepayments and accrued income 566 451
9,315 8,874
Certain of the Group's subsidiaries have invoice discounting
arrangements for their trade receivables which are pledged as
collateral. Under these arrangements it is considered that the
subsidiaries remain exposed to the risks and rewards of ownership,
principally in the form of credit risk, and so the assets continue
to be recognised. The associated liabilities arising restrict the
subsidiaries' use of the assets.
The carrying amount of the assets and associated liabilities is
as follows:
2022 2021
GBP'000 GBP'000
Trade receivables 8,466 8,195
Borrowings (1,143) (1,452)
7,323 6,743
Because of the normal credit periods offered by the
subsidiaries, it is considered that the fair value matches the
carrying value for the assets and associated liabilities.
The Group is exposed to credit risk with respect to trade
receivables due from its customers, primarily in the food
manufacturing segment. This segment has a significant dependency on
a small number of large customers who can and do place significant
contracts. Provisions for bad and doubtful debts are made based on
management's assessment of the risk taking into account the ageing
profile, experience and circumstances. There were no significant
amounts due from individual customers where the credit risk was
considered by the Directors to be significantly higher than the
total population.
During the year, several customers were invoiced in foreign
currency. The Group does not hedge its exposure to foreign exchange
risk but monitors product margins and foreign exchange gains and
losses each month. In the event of a permanent and unfavourable
movement in exchange rates, the Group would review foreign
currency-based selling prices. At the balance sheet date, trade
receivables consisted of customers invoiced in Euros and sterling
as follows:
Trade receivables 2022 2021
GBP'000 GBP'000
Denominated in sterling 8,118 7,933
Denominated in Euros 348 262
8,466 8,195
The ageing analysis of trade receivables is disclosed below:
2022 2021
GBP'000 GBP'000
Up to 3 months 8,088 7,382
3 to 6 months 104 446
6 to 12 months 274 347
Over 12 months - 20
8,466 8,195
14 Cash and cash equivalents
2022 2021
GBP'000 GBP'000
Cash at bank and in hand 19,136 21,871
15 Assets held for sale
Assets held for sale relate to the land and buildings owned by
Indulgence Foods Limited, a subsidiary in the food manufacturing
segment, which are no longer in use as the company has discontinued
operations. The Group expects that these will be sold within 12
months.
In the 2022 financial year, the properties owned by Indulgence
Foods Limited were revalued to GBP2,138,000. Following Indulgence
Patisserie Limited ceasing to trade, these properties were
subsequently reclassified as assets held for sale.
16 Available for sale investments
During the year the Group invested in equity securities pursuant
to its treasury management policies. The investments held at year
end are carried at fair value (GBP1.65 million, 2021: nil) and been
classified as available for sale. The cost of the securities was
GBP1.69 million (2021: nil).
2022 2021
GBP'000 GBP'000
Available for sale investments 1,649 -
17 Trade and other payables (current)
2022 2021
GBP'000 GBP'000
Trade payables 2,638 1,630
Other tax and social security 211 197
Other payables 54 34
Accruals 1,904 1,518
4,807 3,379
The fair value of all trade and other payables approximates to
book value at 31 December 2022 and at 31 December 2021.
18 Financial instruments - risk management
The Group's principal financial instruments are:
-- Trade receivables
-- Cash at bank
-- Loans and right of use leases
-- Trade and other payables
The Group is exposed through its operations to the following
financial risks:
-- Cash flow interest rate risk
-- Foreign currency risk
-- Liquidity risk
-- Credit risk
-- Other market price risk
Policy for managing these risks is set by the Board following
recommendations from the Chief Financial & Operating Officer.
Certain risks are managed centrally, while others are managed
locally following guidelines communicated from the centre. The
policy for each of the above risks is described in more detail
below.
Interest rate risk
Due to the relatively low level of borrowings, the Directors do
not have an explicit policy for managing cash flow interest rate
risk. All current and recent borrowing (other than in respect of
leasing) has been on variable terms, with interest rates of between
3% and 4% above base rate, and the Group has cash reserves
sufficient to repay all borrowings promptly in the event of a
significant increase in market interest rates. All cash is managed
centrally and subsidiary operations are not permitted to arrange
borrowing independently.
The Group's investments may attract interest at fixed or
variable rates, or none at all. The market price of such
investments may be impacted positively or negatively by changes in
underlying interest rates. It is not considered relevant to provide
a sensitivity analysis on the effect of changing interest rates
since, at the year end, none of the Group's investments were
interest bearing.
Foreign currency risk
Foreign exchange risk arises when individual Group operations
enter into transactions denominated in a currency other than their
functional currency (sterling). The Directors monitor and review
their foreign currency exposure on a regular basis. The Directors
are of the opinion that the exposure to foreign currency risk is
not significant.
Liquidity risk
The Group maintains significant cash reserves and therefore does
not require facilities with financial institutions to provide
working capital. Surplus cash is managed centrally to maximise the
returns on deposits.
Credit risk
The Group is mainly exposed to credit risk from credit sales.
The Group's policy for managing and exposure to credit risk is
disclosed in note 13.
Other market price risk
The Group has generated a significant amount of cash and this
has been held partly as cash deposits and partly invested pursuant
to the Group's investing strategy.
Capital management
The Group's main objective when managing capital is to protect
returns to shareholders by ensuring the Group will trade profitably
in the foreseeable future. The Group also aims to maximise its
capital structure of debt and equity so as to minimise its cost of
capital.
The Group manages its capital with regard to the risks inherent
in the business and the sector within which it operates by
monitoring its gearing ratio on a regular basis.
The Group considers its capital to include share capital, share
premium, fair value reserve and retained earnings. Net debt
includes short and long-term borrowings (including lease
obligations) and shares classed as financial liabilities, net of
cash and cash equivalents. The Group has not made any changes to
its capital management during the year. The Group is not subject to
any externally imposed capital requirements.
An analysis of what the Group manages as capital is outlined
below:
2022 2021
GBP'000 GBP'000
Total debt (2,900) (3,468)
Cash and cash equivalents 19,136 21,871
Net funds 16,236 18,403
Total equity (capital) 35,752 37,050
Net funds to capital ratio 45.4% 49.7%
Reconciliation of movement in net cash
Net cash Repayment Other non- Net cash at
at 1 January Cash flow of borrowings cash items 31
2022 December 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank
and in hand 21,871 (2,735) - - 19,136
Borrowings (3,468) - 628 (60) (2,900)
Total financial
liabilities 18,403 (2,735) 628 (60) 16,236
Non-cash items of GBP60,000 relate to the increase in lease
finance arising on the purchase of property, plant and
equipment.
19 Financial assets and liabilities - numerical disclosures
Analysis of financial assets by category:
31 December 2022 Amortised FVOCI Total
cost
GBP'000 GBP'000 GBP'000
Financial assets
Trade and other receivables 9,315 - 9,315
Cash and cash equivalents 19,136 - 19,136
Assets held for sale - 2,103 2,103
Available for sale investments - 1,649 1,649
Total assets 28,451 3,752 32,203
Financial liabilities
Non-current borrowings 1,270 - 1,270
Current borrowings 1,630 - 1,630
Trade and other payables 4,807 - 4,807
Total liabilities 7,707 - 7,707
31 December 2021 Amortised FVOCI Total
cost
GBP'000 GBP'000 GBP'000
Financial assets
Trade and other receivables 8,874 - 8,874
Cash and cash equivalents 21,871 - 21,871
Total assets 30,745 - 30,745
Financial liabilities
Non-current borrowings 1,624 - 1,624
Current borrowings 1,844 - 1,844
Trade and other payables 3,379 - 3,379
Total liabilities 6,847 - 6,847
Fair values
Assets held at fair value fall into three categories, depending
on the valuation techniques used, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices);
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Directors consider the carrying values of all financial
assets and liabilities to be a reasonable approximation of their
fair values.
All other assets, and all liabilities are carried at amortised
cost.
Maturity of financial liabilities
The maturity of borrowings (including right of use leases)
carried at amortised cost is as follows:
2022 2021
GBP'000 GBP'000
Less than six months 1,393 1,592
Six months to one year 237 252
One to two years 418 461
Two to five years 543 719
More than five years 309 444
2,900 3,468
The above borrowings are analysed on the balance sheet as
follows:
2022 2021
GBP'000 GBP'000
Loans and other borrowings (current) 1,258 1,452
Leases (current) 372 392
Loans and other borrowings (non-current) 818 933
Leases (non-current) 452 691
2,900 3,468
Borrowings are secured on certain assets of the Group, and
interest was charged at rates of between 2.5% and 3.2% during the
year. Including interest that is expected to be paid, the maturity
of borrowings (including leases) is as follows:
2022 2021
GBP'000 GBP'000
Less than six months 1,435 1,637
Six months to one year 276 293
One to two years 486 536
Two to five years 624 839
More than five years 323 472
3,144 3,777
The above borrowings including interest that is expected to be
paid are analysed as follows:
2022 2021
GBP'000 GBP'000
Loans and other borrowings (current) 1,294 1,493
Leases (current) 418 437
Loans and other borrowings (non-current) 919 1,068
Leases (non-current) 513 779
3,144 3,777
The maturity of other financial liabilities, excluding loans and
borrowings, carried at amortised cost is as follows:
2022 2021
GBP'000 GBP'000
Less than six months 2,849 1,827
20 Deferred tax
Movements in deferred tax provisions are outlined below:
Accelerated Other
tax depreciation timing Re-valuations
differences Losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2022 (678) 17 (527) 650 (538)
Recognised in P&L during the
year 16 (13) - 169 172
Recognised in equity during
the year - - (297) - (297)
At 31 December 2022 (662) 4 (824) 819 (663)
Previous year movements were as follows:
Accelerated Other
tax depreciation timing Re-valuations
differences Losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2021 (485) 10 (387) 473 (389)
Recognised in P&L during the
year (193) 7 - 177 (9)
Recognised in equity - property
revaluation - - (140) - (140)
At 31 December 2021 (678) 17 (527) 650 (538)
In addition, there are unrecognised net deferred tax assets as
follows:
2022 2021
GBP'000 GBP'000
Tax losses carried forward 832 843
Excess of depreciation over capital allowances - -
Short term temporary differences - -
Net unrecognised deferred tax asset 832 843
Deferred tax assets and liabilities have been calculated using
the rate of corporation tax expected to apply when the relevant
temporary differences reverse of 25% (2021 - 25%). Deferred tax
assets and liabilities are only offset where there is a legally
enforceable right of offset and there is an intention to settle the
balances net.
The unrecognised elements of the deferred tax assets have not
been recognised because there is insufficient evidence that they
will be recovered because such losses are within entities that are
not expected to yield future profits. The losses cannot be used to
offset against profits in other entities as the losses arose prior
to 1 April 2017 and can therefore only be offset against any
profits made by the entity that incurred the loss.
21 Share capital
Authorised
2022 2022 2021 2021
Number GBP'000 Number GBP'000
Ordinary shares of GBP0.0000001
each 100,100,000 - 100,100,000 -
A shares of GBP0.49999995
each 50,000 25 50,000 25
B shares of GBP0.49999995
each 50,000 25 50,000 25
Deferred shares of GBP0.00000001
each 4,999,999,500,000 50 4,999,999,500,000 50
100 100
Issued and fully paid
2022 2022 2021 2021
Number GBP'000 Number GBP'000
Ordinary shares of GBP0.0000001
each 6,207,074 - 6,207,074 -
Deferred shares of GBP0.00000001
each 4,999,994,534,697 50 4,999,994,534,697 50
50 50
Treasury shares
During the year the Company acquired 204,000 (2021: 3,500) of
its own Ordinary shares for total consideration of GBP2,090,000
(2021: GBP44,000). This brought the total number of Ordinary shares
held in treasury to 3,842,652 (2021: 3,638,652) with an aggregate
nominal value of less than GBP1. At the year end the total number
of Ordinary shares outstanding (excluding treasury shares) was
2,364,422 (2021: 2,568,422) .
Rights attaching to deferred shares & A and B shares
The Deferred shares carry no rights to participate in the
profits of the Company and carry no voting rights. After the
distribution of the first GBP10 billion in assets in the event of a
return of capital (other than a purchase by the Company of its own
shares), the Deferred shares are entitled to an amount equal to
their nominal value.
The Company has no A and B shares in issue. These shares have
conversion rights allowing them to convert into Ordinary shares on
a pre-determined formula. All A and B shares previously in issue
have been converted into Ordinary shares.
22 Reserves
All movements on reserves are disclosed in the consolidated
statement of changes in equity.
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Nature and purpose
Share premium Amount subscribed for share capital in excess
of nominal value
Revaluation reserves Cumulative net unrealised gains and short-term
losses arising on the revaluation of the Group's
available for sale investments and freehold
property
Retained earnings Cumulative net gains and losses recognised
in the statement of comprehensive income,
other than those included in revaluation reserves.
23 Related party transactions
Details of amounts payable to Directors, and parties related to
the Directors, are disclosed in note 4. There were no other
transactions with key members of management other than in respect
of out-of-pocket expenses properly incurred, and no other
transactions with related parties.
24 Contingent liabilities
The Group had no material contingent liabilities as at the date
of these financial statements.
25 Non-controlling interests
The non-controlling interests of GBP2,877,000 (2021:
GBP2,402,000 ) relate to the net assets attributable to the shares
not held by the Group at 31 December 2022 in the following
subsidiaries:
2022 2021
Name of subsidiary GBP'000 GBP'000
NMT Group Limited 67 68
Shire Foods Limited 2,810 2,334
2,877 2,402
Summarised financial information (before intra-group
eliminations) in respect of those subsidiaries with material
non-controlling interests is presented below:
Shire Foods
Limited
2022 2021
GBP'000 GBP'000
Non-current assets 8,137 8,081
Current assets 13,939 10,955
Non-current liabilities (1,270) (1,615)
Current liabilities (5,532) (4,581)
Provisions (1,202) (1,150)
Net assets (equity) 14,072 11,690
Group 11,262 9,356
Non-controlling interests 2,810 2,334
14,072 11,690
Revenue 38,175 30,775
Profit for the year after tax (stated after intra-group
management
and interest charges) 2,382 1,778
Profit for the year attributable to non-controlling
interests 475 354
-END-
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END
FR FLFEREVISFIV
(END) Dow Jones Newswires
May 25, 2023 02:00 ET (06:00 GMT)
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