TIDMVLE
RNS Number : 2864O
Volvere PLC
29 May 2020
Volvere plc
("Volvere" or the "Company" and, together with its subsidiaries,
the "Group")
Final results for the year ended 31 December 2019
Volvere plc (AIM: VLE), the growth and turnaround investment
company, announces its final results for the year ended 31 December
2019.
Highlights
GBP million except where stated
Six months
Year ended ended
31 December 30 June
31 December 2018 (unaudited)
2019 (as restated) 2019
Group revenue 23.04 18.34 10.10
Group profit/(loss) before tax 0.14 (2.49) (0.62)
from continuing operations
Group profit for the period (including 3.18 21.10 2.45
discontinued operations)
As at
As at 31 As at 31 30 June 2019
December December 2018 (unaudited)
2019
Consolidated net assets per share
(excluding non-controlling interests)(1) GBP13.85 GBP12.50 GBP13.56
Group net assets 26.99 40.42 26.36
Cash and marketable securities 19.32 34.14 19.65
-- Good performance from Shire Foods, the Group's food
manufacturing business, which achieved revenue and profit before
tax and intra-group management and interest charges(2) of GBP23.04
million (2018: GBP18.34 million) and GBP1.38 million (2018: GBP0.85
million) respectively. Profit before tax for the year was GBP1.18
million (2018: GBP0.65 million).
-- Positive exit with the disposal of Sira Defence & Security for GBP3 million.
-- Share buy-backs undertaken in 2019 returned a total of GBP16.6 million to shareholders.
-- Record net assets per share(1) of GBP13.85.
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.
Note
1 Based on the net assets attributable to owners of the parent
company and the respective period end shares in issue of 1,834,182,
3,118,109 and 1,834,182.
2 Profit before intra-group management and interest charges is
considered to be a relevant and 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. Further information is included in the Chief Executive's
statement and Financial review.
For further information:
Volvere plc
Jonathan Lander, CEO Tel: +44 (0) 20 7634 9707
www.volvere.co.uk
Cairn Financial Advisers LLP
Sandy Jamieson/James Lewis Tel: + 44 (0) 20 7213 0880
Hobart Capital Markets LLP
Lee Richardson Tel: +44 (0) 20 7070 5691
Chairman's statement
I am pleased to report on the results for the year ended 31
December 2019.
The Group's performance in 2019 was once again pleasing, with a
good trading performance from Shire Foods and a disposal in May
2019 of Sira Defence & Security for GBP3 million. Following the
share buy-backs totalling GBP16.6 million in 2019, the Group's net
assets per share* increased to GBP13.85 (2018: GBP12.50).
David Buchler
Chairman
28 May 2020
*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 19.
Chief Executive's statement
Introduction
The results of 2019 reflect the trading performance of Shire
Foods Limited ("Shire") and the gain on the disposal of Sira
Defence & Security Limited ("Sira"), which was sold in May
2019. I was once again pleased with Shire's performance for the
year and delighted with the positive exit from Sira. I wish the
Sira team well in their new home and thank them for their
contribution to the Group.
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 trading subsidiaries' activities during the year were food
manufacturing and security software solutions. In light of the
disposal of Sira, which formed the security software solutions
segment, that company's activities have been classified as
discontinued. The financial performance of the remaining segments
is summarised below and set out in more detail in the financial
review, as well as note 5 to the consolidated financial statements
.
The Group acquired the business and certain assets of Indulgence
Patisserie Limited ("Indulgence") in February 2020. Indulgence
manufactures premium frozen desserts and cakes for the retail and
foodservice markets.
Operating review
Food manufacturing
Shire, in which the Group has an 80% stake, was acquired in
2011. The company manufactures frozen pies, pasties and other
pastry products for food retailers and foodservice customers.
Revenues grew by approximately 26% to GBP23.04 million (2018:
GBP18.34 million) and the company achieved a profit before tax,
intra-group interest and management charges of approximately
GBP1.38 million (2018: GBP0.85 million). Profit before tax was
GBP1.18 million (2018: GBP0.65 million) - with the difference being
intra-group interest and management charges. Further commentary on
the financial performance is set out in the financial review.
I am pleased with the growth achieved in 2019, which came
principally from a deepening of relationships with existing
customers, resulting in wider distribution and broader product
ranges. Particularly encouraging was the growth in vegan product
lines, where we believe we have developed flavours and textures
that appeal to a wide consumer audience. Our new product
development strategy with respect to vegan products is to make them
appealing not only to vegans, but to address the much larger
opportunity represented by those consumers wishing to consume less
meat.
More generally, our strategy in relation to Shire is continuing
to pay dividends - and it did in fact pay a dividend in the period
for the first time since we invested of GBP0.5 million, of which
the Group retained GBP0.4 million. We strive to provide our
customers with the best tasting products in their category and to
innovate constantly. We employ people that "go the extra mile" and
believe that our flat structure, open communication and direct
approach makes Shire a partner supplier of choice. We appreciate
that without the loyalty of our customers and staff Shire would not
have achieved the success, nor have been able to extend and grow
its manufacturing capabilities, in the way that it has. I am very
grateful to everyone at Shire for their efforts and to our
customers for their support.
We know, however, that we need to remain efficient and
productive and are investing further in site capacity in 2020 with
a further GBP0.4 million committed to installation of an additional
manufacturing line.
The impact of the COVID-19 pandemic is explained below.
Further information about Shire can be found at
www.shirefoods.com .
As reported previously, the Group acquired Indulgence in
February 2020. Indulgence manufactures a range of premium sweet
dessert products for both the retail and foodservice markets. We
have been working to integrate that business, streamline its
operations and to improve its performance. The impact of COVID-19
pandemic is explained below.
COVID - 19
The Group's trading businesses are both food manufacturers and,
as a result, have an important part to play during the current
COVID-19 pandemic.
In the first quarter of 2020 there has been an uplift in sales
made to our retail customers when compared with the comparable
period of 2019. However, it is too early to say whether this will
be sustained and ultimately translate into higher sales for the
Group for the year overall. In both Shire and Indulgence there are
foodservice customers from whom we have seen a downturn in
orders.
In the case of Shire, foodservice represented about 12.5% of
sales in 2019. We have some reducing debt and stock exposure to
those customers but at this time we expect that, once the pandemic
restrictions are eased, normal trading will resume over time.
In Indulgence, foodservice previously represented a larger part
of sales, but as we are actively rebuilding that business,
historical sales are less important. More generally, since the
acquisition date, we have been working to improve customer and
supplier relationships, increasing teamwork and investing in new
systems - and whilst we have been encouraged on a number of fronts,
there is still work to be done in making the business more
efficient and reducing costs.
Throughout the COVID-19 period to date we have not seen material
staff absences from illness and at both companies we have put in
place mitigating measures to try to reduce the risk of internal
contagion. Whilst those measures are modestly affecting our
short-term capacity and resulting in increased labour costs, we are
still achieving an encouraging level of output and, for the most
part, meeting customer demand. Our staff's welfare is a continual
focus.
Irrespective of the current pandemic, the Group is in a strong
financial position, with significant cash resources.
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.
Future strategy
We are already seeing increased levels of distressed deal flow
due to the COVID-19 pandemic. The length of the economic effects is
uncertain, but I fear it is likely to extend well into 2021 and
possibly beyond. The anticipated reductions in financial support
from state schemes will probably trigger more hardship for
individuals and companies.
We will do what we can to rescue those businesses which we
believe viable, in all sectors and geographies, in accordance with
our investment mandate, but with added focus on building a larger
group of food businesses, leveraging our competencies in this
area.
Jonathan Lander
Chief Executive
28 May 2020
Financial performance
Detailed information about the Group's segments is set out in
note 5 to the consolidated financial statements which should be
read in conjunction with this financial review and the Chairman's
and Chief Executive's statements.
Overview
The Group's disposal in May 2019 of Sira has resulted in that
business's results being treated as discontinued operations and the
comparative results for 2018 have been restated accordingly. Group
revenue from continuing operations increased by approximately 26%
to GBP23.04 million (re-presented 2018: GBP18.34 million), all of
which arose in Shire.
The overall profit before tax for the year was GBP3.2 million,
including the profit arising from discontinued operations of GBP3.1
million (re-presented 2018: GBP23.2 million). The profit before tax
on continuing operations was GBP0.1 million (re-presented 2018:
loss GBP2.5 million), which was a small improvement over the
underlying result for 2018 (since the loss for that year was stated
after incentive payments of approximately GBP2.5 million relating
to a further discontinued business sold in 2018).
The trading performance of each of our businesses is outlined in
the Chief Executive's statement and set out further in note 5 to
the consolidated financial statements and below.
Food manufacturing
This segment reflects the trading of Shire Foods, owned since
July 2011.
Shire's revenue increased to GBP23.04 million from GBP18.34
million in 2018 and profit before tax and intra-group management
and interest charges increased to GBP1.38 million (2018: GBP0.85
million). Profit before tax for the year was GBP1.18 million (2018:
GBP0.65 million) - with the difference being intra-group interest
and management charges.
The overall materials margin in Shire increased slightly
compared to 2018, principally due to price rises agreed with
customers that took effect during the year along with an improved
product mix towards vegan products. The effect of these was
partially offset by the increase in the National Living Wage and
employer pension contributions. In addition to further increases in
these in 2020, we also expect to see increasing distribution
costs.
Shire had no Group debt outstanding at the start or end of the
year but did borrow GBP0.2m for a short period during 2019 (2018:
GBPnil) to meet working capital requirements. Group management
charges totalled GBP0.2 million in the period (2018: GBP0.2
million). During 2019 Shire invested GBP1.8 million in new plant
and equipment (of which GBP1.1 million was funded by external
debt). The company paid a dividend of GBP0.5 million, of which
GBP0.1 million was paid to third party shareholders.
The 5-year financial performance of Shire is summarised in the
table below:
Year ended 31 Year ended 31 Year ended 31 Year ended 31 Year ended 31
December December December December December
2019 2018 2017 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 23,036 18,344 15,869 15,190 15,476
Underlying
profit before
tax,
intra-group
management and
interest
charges 1,384 854 635 1,149 1,588
Intra-group
management
and interest
charges (200) (200) (200) (240) (423)
________ ________ ________ ________ ________
Profit before
tax 1,184 654 435 909 1,165
Investment revenues, other gains and losses and finance income
and expense
Whilst continuing to review and assess further investments in
trading activities, the Group had significant cash on hand. This
was held on deposit at a UK bank but prevailing low interest rates
meant very low investment revenues (GBPnil) were achieved (2018:
GBP0.12 million). In the previous year, active treasury management
resulted in other gains of GBP0.37 million (2019: nil).
The Group's net finance income was GBP0.06 million (2018:
GBP0.06 million). Despite the Group's significant cash balances,
individual Group trading companies utilise leverage where
appropriate, and without recourse to the remainder of the
Group.
Profit from discontinued business
The Group sold Sira in May 2019 for a total consideration of
GBP3 million. The gain on sale arising, before management and staff
incentives associated with the disposal (which are included in
continuing business overheads), was GBP3.08 million. Of the sale
proceeds, GBP0.24 million is held in escrow, as is customary in
such transactions, for a period of 18 months from the date of
sale.
Statement of financial position
Overall position
Group net assets were GBP27.0 million at the year end (2018:
GBP40.4 million). The decrease year-on-year was due principally to
treasury share purchases, as explained further below.
Cash and current investments
Year-end cash totalled GBP19.3 million (2018: GBP34.1
million).
The principal movements in the cash during the year arose from
the disposal of Sira, offset by purchases of the Group's own
shares. The final consideration receivable by the Group on the sale
of Sira was GBP3 million (GBP0.24m of which is in escrow, as
explained above). The share purchases resulted in outflows of
GBP16.6 million, bringing share purchases to date to approximately
GBP32 million.
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. As noted above, Shire paid a dividend of which
third party shareholders received GBP0.1 million.
Purchase of own shares
During the year the Company purchased 1,283,927 (2018: 550,254)
of its own shares, which are held in treasury, at a cost of GBP16.6
million (2018: GBP6.1 million).
Earnings per share
Basic and diluted loss per ordinary share from continuing
operations was (5.7)p (2018: (63.3)p). The basic and diluted profit
per ordinary share from discontinued operations was 127.9p (2018:
649.5p). Total basic and diluted earnings per ordinary share were
122.2p (2018: 586.2p).
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
similar or complementary to an existing or 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 to the consolidated financial
statements.
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 and order intake is monitored monthly in respect of the
security solutions segment.
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. The current COVID-19 pandemic could impact on the
Group's employees, customers, suppliers and financial position but
has not had a material effect to date.
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 16 to the consolidated financial statements.
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 2019.
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 ultimately in terms of the value arising -
both from operating results and upon any final exit - from the
investments undertaken.
There is an inherent and probable interdependency between the
Company's success and the success of its underlying investments.
Those investments are monitored by the Board on a regular basis and
the success of those investments is key to the success of the
Company over time. However, it is possible that actions taken, or
not taken, from time to time by the Board in relation to the
underlying investments could be perceived as, or be, in conflict
with stakeholder interests within those investments themselves.
Notwithstanding this:
-- The Board assesses risk in the application of capital when
making investment decisions both at the time of initial investment
and subsequently thereafter. The long-term potential outcome of an
investment opportunity is inherently uncertain, but the Board seeks
to minimise downside risk and achieve investment success.
-- The Company and its subsidiaries are dependent upon the
loyalty and hard work of their employees and seeks to reward those
employees fairly whilst creating an environment that is both safe,
secure and rewarding with responsive and trusted leadership.
-- The Company's subsidiaries are encouraged to maintain regular
and honest contact with customers and suppliers, to understand
their needs and to build a partnering approach to business
generally for the long term.
-- The Company's subsidiaries consider the impact of their
operations on their local communities with charitable activities
encouraged and supported.
-- The Company and its subsidiaries consider the impact of their
operations on the environment, with travel minimised and recyclable
packaging materials employed where possible.
-- The Board's intention, for itself and for its subsidiaries,
is to operate responsibly within a governance culture and framework
that is appropriate to nature and size.
-- The Board, through its Annual General Meeting and ad hoc
Stock Market announcements, communicates with members fairly and
equally by providing clear and informative information about the
Company's business and its investments.
Nick Lander
Chief Financial & Operating Officer
28 May 2020
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 11 May
2020.
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 and 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 Nicholas 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 Chairman The Chairman is independent and from an external perspective, engages 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 COO/CFO The COO/CFO is responsible for the operational aspects of the Group's
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.
-----------------------------------------------------------------------------
Role of the Board (continued) 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 Committee It is the role of the Remuneration 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
Note 2019 2018
(as restated)
GBP'000 GBP'000
Continuing operations
Revenue 5 23,036 18,344
Cost of sales (19,454) (15,700)
Gross profit 3,582 2,644
Distribution costs (1,225) (1,095)
Administrative expenses (2,281) (4,589)
Operating profit/(loss) 2 76 (3,040)
Investment revenues 7 - 115
Other gains and losses 7 - 374
Finance expense 7 (118) (47)
Finance income 7 179 106
Profit/(Loss) before tax 137 (2,492)
Income tax (expense)/credit 8 (31) 370
Profit/(Loss) for the year from continuing
operations 106 (2,122)
Profit for the year from discontinued
operations 6 3,078 23,218
Profit for the year 3,184 21,096
Attributable to:
- Equity holders of the parent 2,942 20,956
- Non-controlling interests 242 140
3,184 21,096
Earnings per share 9
Basic
- from continuing operations (5.7)p (63.3)p
- from discontinued operations 127.9p 649.5p
Total 122.2p 586.2p
Diluted
- from continuing operations (5.7)p (63.3)p
- from discontinued operations 127.9p 649.5p
Total 122.2p 586.2p
Consolidated statement of comprehensive income
2019 2018
GBP'000 GBP'000
Profit for the year 3,184 21,096
Other comprehensive income - -
Total comprehensive income for the year 3,184 21,096
Attributable to:
- Equity holders of the parent 2,942 20,956
- Non-controlling interests 242 140
3,184 21,096
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
2019
Other comprehensive
income - - - - - - -
Profit for the year - - - 2,942 2,942 242 3,184
Total comprehensive
income for the year - - - 2,942 2,942 242 3,184
Balance at 1 January 50 3,640 100 35,180 38,970 1,447 40,417
Transactions with
owners:
Purchase of own
shares - - - (16,512) (16,512) - (16,512)
Dividend paid to
non-controlling interests - - - - - (100) (100)
Total transactions
with owners - - - (16,512) (16,512) (100) (16,612)
Balance at 31 December 50 3,640 100 21,610 25,400 1,589 26,989
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
2018
Other comprehensive
income - - - - - - -
Profit for the year - - - 20,956 20,956 140 21,096
Total comprehensive
income for the year - - - 20,956 20,956 140 21,096
Balance at 1 January 50 3,640 177 20.319 24,186 1,958 26,144
Transactions with
owners:
Purchase of own
shares - - - (6,095) (6,095) - (6,095)
Share based payments - - - - - - -
Total transactions
with owners - - - (6,095) (6,095) - (6,095)
Eliminated on disposal - - (77) - (77) (651) (728)
Balance at 31 December 50 3,640 100 35,180 38,970 1,447 40,417
Consolidated statement of financial position
Company number 04478674
2019 2018
Note GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 11 7,331 6,062
Total non-current assets 7,331 6,062
Current assets
Inventories 12 2,204 1,774
Trade and other receivables 13 4,816 4,447
Cash and cash equivalents 14 19,317 34,137
Total current assets 26,337 40,358
Total assets 33,668 46,420
Liabilities
Current liabilities
Loans and other borrowings 17 (1,154) (708)
Leases 17 (466) (314)
Trade and other payables 15 (2,408) (2,776)
Total current liabilities (4,028) (3,798)
Non-current liabilities
Loans and other borrowings 17 (1,151) (1,254)
Leases 17 (1,334) (816)
Total non-current liabilities (2,485) (2,070)
Total liabilities (6,513) (5,868)
Provisions - deferred tax 18 (166) (135)
Net assets 26,989 40,417
Equity
Share capital 19 50 50
Share premium account 20 3,640 3,640
Revaluation reserves 20 100 100
Retained earnings 21,610 35,180
Capital and reserves attributable
to equity holders of the Company 25,400 38,970
Non-controlling interests 23 1,589 1,447
Total equity 26,989 40,417
Consolidated statement of cash flows
2019 2019 2018 2018
Note GBP'000 GBP'000
GBP'000 GBP'000 (as restated) (as restated)
Profit for the year 3,184 21,096
Adjustments for:
Investment revenues 7 - (115)
Other gains and losses 7 - (374)
Finance expense 7 118 47
Finance income 7 (179) (106)
Profit from discontinued operations 6 (3,078) (23,218)
Depreciation 11 633 458
Income tax (credit)/expense 8 31 (370)
(2,475) (23,678)
Operating cash flows before movements
in working capital 709 (2,582)
Increase in trade and other receivables (349) (350)
(Decrease)/Increase in trade and
other payables (18) 1,109
(Decrease) in inventories (430) (308)
Tax paid (50) (100)
Cash (used by)/generated from
continuing operations (138) (2,231)
Operating cash flows from discontinued
operations (315) 1,838
________ ________
Net cash used by/generated from
operating activities (453) (393)
Investing activities
Proceeds from sale of discontinued
operations net of cash sold 3,138 22,537
Proceeds from disposal of available
for sale investments - 6,632
Purchase of property, plant and
equipment (916) (429)
Interest received 7 179 106
Income from investments 7 - 115
Net cash generated from/used by
investing activities 2,401 28,961
Financing activities
Interest paid 7 (118) (47)
Purchase of own shares (treasury
shares) 19 (16,575) (6,094)
Net increase/(repayment) of borrowings 25 (375)
Dividend paid by subsidiary to
external shareholders (100) (49)
Net cash used by financing activities (16,768) (6,565)
Net (decrease)/increase in cash (14,820) 22,003
Cash at beginning of year 34,137 12,119
Foreign exchange movement - 15
Cash at end of year 19,317 34,137
Notes forming part of the preliminary announcement
The financial information set out above, which was approved by
the Board on 28 May 2020, is derived from the full Group accounts
for the year ended 31 December 2019 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 2019, 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 3
June 2020 and will be available online at www.volvere.co.uk.
1 Accounting policies
Basis of accounting
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS and IFRIC
interpretations) as adopted by the European Union ("adopted IFRS")
and with those parts of the Companies Act 2006 applicable to
companies preparing their accounts under adopted IFRS.
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 16 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.
The following principal accounting policies have been applied
consistently, in all material respects, in the preparation of these
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 are 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.
Revenue earned on time and materials contracts is recognised as
costs are incurred. Income from fixed price contracts is recognised
in proportion to the stage of completion, determined on the basis
of work done, of the relevant contract.
Revenue from consulting services is recognised when the services
are provided by reference to the contract's stage of completion at
the reporting date. When the outcome can be assessed reliably,
contract revenue and associated costs are recognised by reference
to the stage of completion of the contract activity at the
reporting date. When the outcome of a contract cannot be estimated
reliably, revenue is recognised only to the extent of contract
costs that have been incurred and are recoverable. Contract costs
are recognised in the period in which they are incurred or, where
recoverable from clients, are included in work-in-progress.
Revenue from consulting services relating to fixed price
contracts is recognised in relation to the delivery of the
performance obligations specified in the contract. Penalties for
non-performance against specific terms of the contract are provided
for when there is a probable outflow of resources under the
contract terms and the amount can be reliably estimated. Such
adjustments are deducted from revenue.
Revenue from software licences is recognised either upfront
(where the grant of the licence is at inception of a contract and
where maintenance is provided as a separate service) or
periodically in line with the time for which the licence is
provided (where such provision is part of an ongoing managed
service).
If it is probable that total contract costs will exceed total
contract revenue, the expected loss is recognised immediately in
profit or loss.
The gross amount due from customers for contract work is
presented within trade and other receivables for all contracts in
progress for which costs incurred plus recognised profits (less
recognised losses) exceeds progress billings. The gross amount due
to customers for contract work is presented within other
liabilities for all contracts in progress for which progress
billings exceed costs incurred plus recognised profits (less
recognised losses).
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.
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.
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 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
Improvements to short-term leasehold property - Over the life of the lease
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.
Financial assets classified as available for sale (AFS) under
IAS 39 (comparative periods)
AFS financial assets are non-derivative financial assets that
are either designated to this category or do not qualify for
inclusion in any of the other categories of financial assets (FVTPL
or held to maturity and loans and receivables). The Group's AFS
financial assets include listed equity securities.
All AFS financial assets were measured at fair value. Gains and
losses were recognised in other comprehensive income and reported
within the AFS reserve within equity, except for interest and
dividend income, impairment losses and foreign exchange differences
on monetary assets which are recognised in profit or loss. When the
asset was disposed of or was determined to be impaired, the
cumulative gain or loss recognised in other comprehensive income
was reclassified from the equity reserve to profit or loss.
Interest calculated using the effective interest method and
dividends were recognised in profit or loss within finance
income.
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.
Revenue recognition
Management makes judgements against the terms of fixed price
contracts and whether they could result in penalties relating to
non-performance against specific terms. This relates to GBPnil
revenue in 2019 (2018: GBPnil).
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 have 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.
New and revised standards and interpretations applied
The following new and revised Standards and Interpretations have
been issued and are effective for the current financial year of the
Group:
IFRS 16 was adopted on 1 January 2019 without restatement of
comparative figures. No transitional adjustments were required upon
adoption.
All leases are 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 right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the commencement date plus any
initial direct costs, less any lease incentives received.
The right-of-use asset is subsequently depreciated in accordance
with the company's depreciation policies. The estimated useful
lives of right-of-use assets are determined on the same basis as
those of other tangible fixed assets. The right-of-use asset is
periodically reduced by impairment losses, if any, and adjusted for
certain remeasurements of the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are unpaid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the company's incremental
borrowing rate. Lease payments included in the measurement of the
lease liability comprise fixed payments, variable lease payments
that depend on an index or a rate, amounts expected to be payable
under a residual value guarantee, and the cost of any options that
the company is reasonably certain to exercise, such as the exercise
price under a purchase option, lease payments in an optional
renewal period, or penalties for early termination of a lease.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in: future lease payments arising from a change in an index or
rate; the company's estimate of the amount expected to be payable
under a residual value guarantee; or the company's assessment of
whether it will exercise a purchase, extension or termination
option. When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
The following Adopted IFRSs have been issued but have not been
applied by the Group in these financial statements, all of which
are effective for the accounting period commencing 1 January 2020.
Their adoption is not expected to have a material effect on the
financial statements unless otherwise indicated:
- Amendments to References to the Conceptual Framework in IFRS Standards
- Amendments to IFRS 3: Definition of a Business
- Amendments to IAS 1 and IAS 8: Definition of Material
2 Operating (loss)/profit
Operating (loss)/profit is stated after charging:
2019 2018
GBP'000 GBP'000
(as restated)
Staff costs 4,646 5,770
Depreciation of property, plant and equipment 633 458
Operating lease expense 12 14
Exchange loss 2 6
Auditor's fees - audit services 31 29
The analysis of audit fees is as follows:
- for the audit of the Company's annual accounts 8 8
- for the audit of the Company's subsidiaries'
accounts 23 21
31 29
3 Staff costs
Staff costs comprise:
2019 2018
GBP'000 GBP'000
(as restated)
Wages and salaries 4,229 5,183
Employer's National Insurance contributions 315 530
Defined contribution pension cost 102 57
4,646 5,770
The average number of employees (including Directors) in the
Group was as follows:
2019 2018
Number Number
Engineering, production and professional 146 106
Sales and marketing 7 6
Administration and management 31 25
184 137
4 Directors' remuneration
The remuneration of the directors was as follows:
Salaries Other
& fees benefits Total
2019 2019 2019
GBP'000 GBP'000 GBP'000
David Buchler 34 - 34
Jonathan Lander 143 - 143
Nick Lander 143 1 144
320 1 321
Salaries Other
& fees benefits Total
2018 2018 2018
GBP'000 GBP'000 GBP'000
David Buchler 45 - 45
Jonathan Lander 1,083 - 1,083
Nick Lander 1,083 1 1,084
2,211 1 2,212
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 GBP528,000 (2018:
GBP861,000). Amounts owed to D2L Partners LLP at the year end
totalled GBPnil (2018: GBP333,000).
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
GBP11,250 (2018: GBP11,250). N one of the directors were members of
the Group's defined contribution pension plan in the year (2018:
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.
During the year, the security solutions segment was sold and
therefore the results of this segment are now included within
Profit in the year from discontinued operations and have been
excluded from the following analysis:
Investing and management services
Food manufacturing 2019
2019 GBP'000 Total
GBP'000 2019
GBP'000
Revenue 23,036 - 23,036
Profit/(loss) before tax(1) 1,384 (1,247) 137
Investing and management services Total
Food manufacturing 2018 2018
2018 GBP'000 (as
GBP'000 restated)
GBP'000
Revenue 18,344 - 18,344
Profit/(loss) before tax(1) 854 (3,346) (2,492)
Investing and management
Security solutions Food manufacturing services
2019 2019 2019 Total
GBP'000 GBP'000 GBP'000 2019
GBP'000
Assets - 14,336 19,332 33,668
Liabilities/provisions - (6,732) 51 (6,681)
Net assets(2) - 7,604 19,383 26,987
Investing and management
Security solutions Food manufacturing services
2018 2018 2018 Total
GBP'000 GBP'000 GBP'000 2018
GBP'000
Assets 419 12,311 33,690 46,420
Liabilities/provisions (359) (5,427) (217) (6,003)
Net assets(2) 60 6,884 33,473 40,417
(1) stated before intra-group management and interest charges
(2) assets and liabilities stated excluding intra-group balances
Investing and management services
Security solutions Food manufacturing 2019
2019 2019 GBP'000 Total
GBP'000 GBP'000 2019
GBP'000
Capital spend - 1,904 - 1,904
Depreciation - 632 1 633
Interest income
(non-Group) - - 179 179
Interest expense
(non-Group) - 118 - 118
Tax expense - 38 (69) (31)
Investing and management services
Security solutions Food manufacturing 2018 Total
2018 2018 GBP'000 2018
GBP'000 GBP'000 (as restated)
GBP'000
Capital spend - 1,253 - 1,253
Depreciation 2 458 - 46 0
Amortisation/impairment - - - -
Interest income
(non-Group) - - 106 106
Interest expense
(non-Group) - 47 - 47
Tax expense (32) (52) (318) (402)
Geographical analysis:
External revenue Non-current assets
by by
location of customers location of assets
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
(as restated)
UK 22,522 17,746 7,331 6,062
Rest of Europe 514 598 - -
23,036 18,344 7,331 6,062
The Group had 3 (2018: 4) customers (all in the food manufacturing
segment) that individually accounted for in excess of 10% of the
Group's continuing revenues as follows:
2019 2018
GBP'000 GBP'000
First customer 8,761 7,207
Second customer 8,119 4,901
Third customer 3,037 2,763
Fourth customer - 2,437
There is minimal uncertainty over the timing and amount of
revenue recognition in respect of continuing operations. 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 23 May 2019 the Group disposed of its subsidiary undertaking,
Sira Defence and Security Limited for a total of GBP3.0 million in
cash, resulting in a gain of GBP3.4 million before tax.
The profit of Sira Defence and Security Limited until the date
of disposal and the gain on disposal are summarised below. The
discontinued operations in 2018 include the results of the Group's
former subsidiary, Impetus Automotive Limited, which was sold in
that year.
2018
(as restated)
2019
GBP'000 GBP'000
Revenue 154 22,460
Cost of sales 45 (16,654)
Gross profit 199 5,806
Administrative expenses (578) (3,137)
Operating loss/profit (379) 2,669
Finance expense - (36)
(Loss)/profit from discontinued operations before tax (379) 2,633
Income tax expense 27 (506)
(Loss)/profit for the period (352) 2,127
Total gain on disposal 3,430 21,091
Profit for the year from discontinued operations 3,078 23,218
All of the assets and liabilities have been disposed of in this
transaction.
Cash flows generated by Sira Defence and Security Limited for
the reporting periods under review until its disposal are
summarised below. The discontinued operations in 2018 include the
results of the Group's former subsidiary, Impetus Automotive
Limited, which was sold in that year.
2018
(as restated)
2019 GBP'000
GBP'000
Operating activities (315) 1,838
Investing activities 3,138 22,537
Cash flows from discontinued operations 2,823 24,375
Cash flows from investing activities relate solely to the
proceeds from the sale of Sira Defence and Security Limited which
was received in cash in 2019, of which GBP240,000 was held on
escrow. At the date of disposal, the carrying amounts of Sira
Defence and Security Limited's net assets were as follows:
GBP'000
Assets
Non-current assets
Property, plant and equipment 2
Total non-current assets 2
Current assets
Trade and other receivables 112
Cash and cash equivalents 26
Total current assets 138
Liabilities
Current liabilities
Trade and other payables (432)
Total liabilities (432)
Provisions -
Net liabilities (292)
Net liabilities disposed (292)
Intra-group charges (134)
Total net consideration received in cash 3,004
Gain on disposal 3,430
7 Investment revenues, other gains and losses and finance income and expense
2019 2018
GBP'000 GBP'000
Investment revenues - 115
Other gains and losses - 374
Finance income
Bank interest receivable 179 106
Finance expense
Bank interest 14 21
Lease interest (86) (22)
Other interest and finance charges (46) (46)
(118) (47)
Investment revenues and other gains and losses represent
respectively interest and dividends receivable from, and the gains
arising upon disposal of, investments made pursuant to the Group's
investing and treasury management policies.
8 Income tax
2018
(as restated)
2019
GBP'000 GBP'000
Current tax expense - current year
Current tax credit - adjustments in respect of prior - -
years - (23)
Deferred tax (credit)/expense recognised in income
statement - current year 31 (343)
Deferred tax credit recognised in income statement
- adjustments in respect of prior years - (4)
Total tax (credit)/expense recognised in income statement 31 (370)
Tax recognised directly in equity - -
Total tax recognised 31 (370)
The reasons for the difference between the actual tax expense
for the year and the standard rate of corporation tax in the UK
applied to profits for the year are as follows:
2018
(as restated)
2019 GBP'000
GBP'000
Profit before tax 137 (2,428)
Expected tax charge based on the prevailing rate of
corporation tax in the UK of 19% 26 (461)
Effects of:
Expenses not deductible for tax purposes 24 25
Income/gains not subject to tax (3) (93)
Deferred tax not recognised (37) 84
Other adjustments 23 58
Effect of changes in rate of tax (2) 44
Adjustments in respect of prior years - (27)
Total tax recognised in income statement 31 (370)
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 18.
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: 2018
2019 (as restated)
GBP'000 GBP'000
(Loss)/profit attributable to equity holders of the
parent company:
From continuing operations (136) (2,262)
From discontinued operations 3,078 23,218
EEa
Weighted average number of shares for the purposes 2019 2018
of earnings per share: No. No.
Weighted average number of ordinary shares in issue 2,405,768 3,574,895
Dilutive effect of potential ordinary shares - -
Weighted average number of ordinary shares for diluted
EPS 2,405,768 3,574,895
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 address Principal of ownership
Name Activity interest
in ordinary
shares at
31 December
2019
Volvere Central Services
Limited Note 1 Group support services 100%
NMT Group Limited Note 2 Investment 98.6%
Sira Defence & Security Note 1 Software publishing Note 3
Limited
Shire Foods Limited Note 1 Food manufacturing 80%
Impetus Automotive
Solutions Limited Note 1 Dormant 100%
New Medical Technology Note 2 Dormant 98.6%
Limited
Zero-Stik Limited Note 2 Dormant 98.6%
Note 1 - Registered at Shire House, Tachbrook Road, Leamington
Spa, Warwickshire, CV31 3SF, England.
Note 2 - Registered at c/o Wright, Johnston & Mackenzie LLP,
302 St Vincent St, Glasgow, G2 5RZ, Scotland.
Note 3 - The Group owned 100% of the ordinary shares of Sira
Defence & Security Limited. On 23(rd) May 2019, the Group sold
the entirety of its shareholding.
11 Property, plant and equipment
Short Leasehold
Property Freehold Plant &
GBP'000 Property Machinery Total
GBP'000 GBP'000 GBP'000
Cost or valuation
At 1 January 2018 180 2,550 4,889 7,619
Additions - - 1,253 1,253
Revaluations - - - -
Disposals (180) - (281) (461)
At 31 December 2018 and 1 January
2019 - 2,550 5,861 8,411
Additions - - 1,906 1,906
Revaluation - - - -
Disposals - - (16) (16)
At 31 December 2019 - 2,550 7,751 10,301
Accumulated depreciation
At 1 January 2018 87 - 2,108 2,195
Disposals (87) - (219) (306)
Charge for the year - 38 422 460
At 31 December 2018 and 1 January
2019 - 38 2,311 2,349
Disposals - - (12) (12)
Charge for the year - 38 595 633
At 31 December 2019 - 76 2,894 2,970
Net book value
At 31 December 2019 - 2,474 4,857 7,331
At 31 December 2018 - 2,512 3,550 6,062
Freehold property was revalued by an independent valuation
specialist to GBP2,550,000 as at 5 December 2017.
Under the cost model, the carrying value of freehold property
would be GBP2,290,000. All other property, plant and equipment is
carried at cost less accumulated depreciation.
Management consider 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 subsidiaries) with a
net book value of GBP7.33 million is pledged as collateral for
Group borrowings (all of which are within subsidiaries).
Right-of-use asset
The Group leases certain plant and equipment. The average
remaining lease term across all leases is 3.8 years. There are no
options to purchase at the end of the lease lives. 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:
2019 2018
GBP'000 GBP'000
Net values 2,388 1,533
Depreciation charge for the year 231 131
Amounts recognised in profit and loss
2019 2018
GBP'000 GBP'000
Interest expense on lease liabilities 86 22
Expense relating to short-term leases 12 14
The aggregate undiscounted commitments for short-term and low
value leases at the year end was GBP7,000.
12 Inventories
2019 2018
GBP'000 GBP'000
Raw materials 782 603
Finished products 1,422 1,171
2,204 1,774
The total amount of inventories consumed in the year and charged
to cost of sales was GBP14.31 million (2018 restated: GBP11.86
million).
13 Trade and other receivables
2019 2018
GBP'000 GBP'000
Trade receivables 4,349 4,024
Less: provision for impairment of trade receivables - -
Net trade receivables 4,349 4,024
Other receivables 153 170
Amounts recoverable on contracts - -
Prepayments and accrued income 314 253
4,816 4,447
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:
2019 2018
GBP'000 GBP'000
Trade receivables 4,349 3,952
Borrowings (1,051) (609)
3,298 3,343
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 automotive
consulting and food manufacturing segments. Both segments have a
relatively large number of customers, however there is 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.
There is no significant currency risk associated with trade
receivables as the vast majority are denominated in Sterling.
The ageing analysis of trade receivables is disclosed below:
2019 2018
GBP'000 GBP'000
Up to 3 months 4,097 3,985
3 to 6 months 252 39
6 to 12 months - -
Over 12 months - -
4,349 4,024
14 Cash and cash equivalents
2019 2018
GBP'000 GBP'000
Cash at bank and in hand 19,317 34,137
Included within cash at bank and in hand is an amount of
GBP2,627,000 held in escrow. This is held to satisfy, in the first
instance, any warranty or similar claims arising following the
sales of Impetus Automotive Limited ("Impetus") and Sira Defence
and Security Limited. The escrow retention period is 18 months from
the date of sale. Subsequent to the year end, the full amount
relating to Impetus of GBP2,387,000 was released from escrow.
15 Trade and other payables (current)
2019 2018
GBP'000 GBP'000
Trade payables 1,250 1,335
Other tax and social security 107 111
Other payables 34 43
Accruals 1,017 1,040
Deferred income - 247
2,408 2,776
The fair value of all trade and other payables approximates to
book value at 31 December 2019 and at 31 December 2018.
16 Financial instruments - risk management
The Group's principal financial instruments are:
-- Trade receivables
-- Cash at bank
-- Current asset investments
-- 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 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 continue to
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:
2019 2018
GBP'000 GBP'000
Total debt (4,105) (3,092)
Cash and cash equivalents 19,317 34,137
Net funds 15,212 31,045
Total equity (capital) 26,987 40,417
Net funds to capital ratio 56.4% 76.8%
Reconciliation of movement in net cash
Net cash Net cash
at 1 Other at 31 December
January Repayment non- 2019
2019 Cash of borrowings cash
flow items
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash at bank and in hand 34,137 (14,820) - - 19,317
Borrowings (3,092) - (25) (988) (4,105)
Total financial liabilities 31,045 (14,820) (25) (988) 15,212
Non-cash items of GBP988,000 relate to the increase in lease
finance arising on the purchase of fixed asset additions.
17 Financial assets and liabilities - numerical disclosures
Analysis of financial assets by category:
31 December 2019 Amortised FVTPL Total
cost
GBP'000 GBP'000 GBP'000
Financial assets
Trade and other receivables 4,816 - 4,816
Cash and cash equivalents 19,317 - 19,317
Total assets 24,133 - 24,133
Financial liabilities
Non-current borrowings 3,054 - 3,054
Current borrowings 1,051 - 1,051
Trade and other payables 2,408 - 2,408
Total liabilities 6,513 - 6,513
31 December 2018 Amortised FVTPL Total
cost
GBP'000 GBP'000 GBP'000
Financial assets
Trade and other receivables 4,447 - 4,447
Cash and cash equivalents 34,137 - 34,137
Total assets 38,584 - 38,584
Financial liabilities
Non-current borrowings 2,483 - 2,483
Current borrowings 609 - 609
Trade and other payables 2,776 - 2,776
Total liabilities 5,868 - 5,868
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.
Available for sale investments fall under Level 1 in the IFRS 7
fair value hierarchy.
All other assets, and all liabilities are carried at amortised
cost.
Maturity of financial assets
The maturities and denominations of financial assets at the year
end, other than cash and cash equivalents, and loans and
receivables (note 13 above) are as follows:
2019 2018
GBP'000 GBP'000
Sterling
No fixed maturity - -
17 Financial assets and liabilities - numerical disclosures (continued)
Maturity of financial liabilities
The maturity of borrowings (including right of use leases)
carried at amortised cost is as follows:
2019 2018
GBP'000 GBP'000
Less than six months 1,339 818
Six months to one year 281 204
One to two years 438 368
Two to five years 1,273 720
More than five years 774 982
4,105 3,092
The above borrowings are analysed on the balance sheet as
follows:
2019 2018
GBP'000 GBP'000
Loans and other borrowings (current) 1,154 708
Leases (current) 466 314
Loans and other borrowings (non-current) 1,151 1,254
Leases (non-current) 1,334 816
4,105 3,092
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:
2019 2018
GBP'000 GBP'000
Less than six months 1,387 863
Six months to one year 326 244
One to two years 522 435
Two to five years 1,492 888
More than five years 858 1,110
4,585 3,540
The above borrowings including interest that is expected to be
paid are analysed as follows:
2019 2018
GBP'000 GBP'000
Loans and other borrowings (current) 1,202 760
Leases (current) 511 347
Loans and other borrowings (non-current) 1,367 1,516
Leases (non-current) 1,505 917
4,585 3,540
The maturity of other financial liabilities, excluding loans and
borrowings, carried at amortised cost is as follows:
2019 2018
GBP'000 GBP'000
Less than six months 1,357 1,446
18 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 2019 (319) - (135) 319 (135)
Recognised in P&L during the
year 4 44 - (79) (31)
At 31 December 2019 (315) 44 (135) 240 (166)
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 2018 (386) 7 (135) - (514)
Recognised in P&L during the
year 67 (7) - 319 379
At 31 December 2018 (319) - (135) 319 (135)
In addition, there are unrecognised net deferred tax assets as
follows:
2019 2018
GBP'000 GBP'000
Tax losses carried forward 573 675
Excess of depreciation over capital allowances - 5
Short term temporary differences - 15
Net unrecognised deferred tax asset 573 695
Deferred tax assets and liabilities have been calculated using
the rate of corporation tax expected to apply when the relevant
temporary differences reverse. 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 and cannot be used to offset
against profits in other entities.
19 Share capital
Authorised
2019 2019 2018 2018
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
2019 2019 2018 2018
Number GBP'000 Number GBP'000
Ordinary shares of GBP0.0000001
each 6,207,074 - 6,207,074 -
Deferred shares of GBP0.00000001
each 4,999,994,534,696 50 4,999,994,534,696 50
50 50
Treasury shares
During the year the Company acquired 1,283,927 (2018: 550,254)
of its own Ordinary shares for total consideration of GBP16,512,000
(2018: GBP6,094,000). This brought the total number of Ordinary
shares held in treasury to 4,372,892 with an aggregate nominal
value of less than GBP1. At the year end the total number of
Ordinary shares outstanding (excluding treasury shares) was
1,834,182 (2018: 3,118,109 ).
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.
20 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.
21 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, and no other
transactions with related parties.
22 Contingent liabilities
The Group had no material contingent liabilities as at the date
of these financial statements.
23 Non-controlling interests
The non-controlling interests of GBP1,589,000 (2018:
GBP1,434,000 ) relate to the net assets attributable to the shares
not held by the Group at 31 December 2019 in the following
subsidiaries:
2019 2018
Name of subsidiary GBP'000 GBP'000
NMT Group Limited 70 71
Impetus Automotive Limited - -
Shire Foods Limited 1,519 1,376
1,589 1,447
Summarised financial information (before intra-group
eliminations) in respect of those subsidiaries with material
non-controlling interests is presented below.
Impetus Automotive
Limited Shire Foods
Limited
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets - - 7,330 6,060
Current assets - - 7,006 6,252
Non-current liabilities - - (2,485) (2,070)
Current liabilities - - (3,830) (2,903)
Provisions - - (416) (454)
Net assets (equity) - - 7605 6,885
Attributable to:
Group - - 6,086 5,509
Non-controlling interests - - 1,519 1,376
- - 7,605 6,885
Revenue - - 23,036 18,344
Profit for the year after tax (stated
after intra-group management
and interest charges) - 2,035 1,221 706
Profit for the year attributable to
non-controlling interests - 342 244 141
24 Events after the balance sheet date
24(a) Acquisition of Indulgence Patisserie Limited
On 7 February 2020, the Group acquired the trade and assets of
Indulgence Patisserie Limited ("Indulgence"), a business engaged in
the manufacture of premium desserts for the retail and foodservice
markets for a cash consideration of GBP1.25m. There is no deferred
or contingent consideration. Directly attributable acquisition
costs currently amount to GBP107,000 and will be included in
administrative expenses in the period ended 31 December 2020.
The provisionally determined fair values of the assets and
liabilities of Indulgence as at the date of acquisition are as
follows:
GBP'000
Property 1,000
Plant and equipment 335
Inventories 120
Current liabilities (40)
Net assets acquired 1,415
Consideration - cash 1,250
Negative goodwill arising (165)
24(b) Other events
The impact of COVID-19 since the balance sheet date is set out
in the Strategic Report.
There have been no other significant events warranting
disclosure in these financial statements.
-S -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR FLFIDERITFII
(END) Dow Jones Newswires
May 29, 2020 02:00 ET (06:00 GMT)
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