Interim Results

Volvere PLC 13 September 2004 Embargoed until 07.00 13 September 2004 VOLVERE PLC INTERIM RESULTS FOR THE SIX MONTHS TO 2 JULY 2004 Volvere PLC ('Volvere' or 'the Company', or 'the Group'), the activist and turnaround investment company, announces its interim results for the six months ended 2 July 2004. Financial Highlights: • Turnover £5.4m (30 June 2003: £1.3m), all arising from the Group's subsidiary, Vectra Group Limited ('Vectra') • Pre-tax and post-tax loss £0.22m (30 June 2003: £0.19m), stated after restructuring costs of £0.09m relating to Vectra (30 June 2003: £0.09m) • Vectra's average monthly operating loss before Group management charges reduced to £19k (7 months to 31 December 2003: £63k) • Vectra profitable before Group management charges in second quarter of period • Net assets of £3.83m (30 June 2003: £3.27m; 31 December 2003: £4.0m) • Cash on hand £3.01m (30 June 2003: £2.14m; 31 December 2003: £3.28m) • Loss per share 6.02p (30 June 2003: 6.10p). Operational Highlights: • Restructuring of Vectra has delivered an improved performance • Focus being extended to other sectors Chairman, Lord Kalms, said: 'The continuing improvement at Vectra is encouraging and is testimony to our staff, our management and our ability to buy distressed businesses on reasonable terms.' For further information, please contact: Volvere PLC +44 (0) 20 7575 7596 Jonathan Lander, Chief Executive Officer Nick Lander, Chief Operating and Financial Officer Weber Shandwick Square Mile +44 (0) 20 7067 0700 Terry Garrett / Christian Taylor-Wilkinson Teather & Greenwood +44 (0) 20 7426 9000 Jeff Keating / Tom Hulme About Volvere Volvere was admitted to AIM in December 2002 as an activist investor both in undervalued companies and also in companies that are in distress but offer the possibility of a turnaround. Its executive directors are the executives of the venture capital and advisory firm Dawnay Day Lander Ltd. Its non-executive directors are Lord Kalms, Neil Ashley and David Buchler. Website: www.volvere.co.uk Embargoed until 07.00 13 September 2004 VOLVERE PLC INTERIM RESULTS FOR THE SIX MONTHS TO 2 JULY 2004 CHAIRMAN'S STATEMENT The Board is pleased to present the interim statement for the six months ending 2 July 2004. Following the restructuring of Vectra, I am pleased to report that it was profitable before Group management charges during the second quarter of this period. This is the first time that Vectra has delivered such a quarterly profit since we acquired it in May 2003. That is a trend we expect to continue during the second half of 2004. During the period we considered a number of acquisitions of consulting businesses complementary to Vectra but on balance we felt it more attractive to grow Vectra organically. Partly because of this, we have decided to extend our focus for new acquisitions to areas outside Vectra's core activities. Results Turnover for the six months to 2 July 2004 was £5.4m, all of which was generated by the company's subsidiary, Vectra. Table A below summarises key financial information in relation to Vectra. The Group's previous interim statement at 30 June 2003 was for the period since Volvere's incorporation and included only one month's results in respect of Vectra, which was then newly acquired. The Group's results for the period ending 31 December 2003 reflected approximately seven months contribution from Vectra. The Group's loss after tax for the six months was £0.22m (30 June 2003: £0.19m), stated after costs of £0.09m (30 June 2003: £0.09m) relating to the restructuring of Vectra during the period. At 2 July 2004 the Group's net assets amounted to £3.83m (30 June 2003: £3.27m). Vectra - Comments on Performance We have seen continued improvements in Vectra's performance during the period. Further reductions in headcount were made early in the year and a decision made to close the Disaster Recovery business unit. Excluding the costs of restructuring of £0.09m, the loss for the six months in Vectra (before Group management charges) amounted to £0.03m. This is a substantial improvement in Vectra's performance over 2003. In the second quarter of the period, Vectra was profitable before Group management charges. We have continued to invest in growing the fee-earning capacity in our core market sectors of Nuclear, Transportation and Oil and Gas. This has a short-term cost which we believe is a necessary investment to ensure Vectra has the depth and breadth of capability to grow further in the second half of 2004 and in 2005. We have been encouraged by extensions to consulting assignments with several key clients in the period. We believe this to be testimony to the quality of the work done by our consultants. Table A Vectra - Summary of performance 1 January to 24 May to 31 2 July 2004 December 2003 Note £000 £000 Turnover 5,447 7,061 Average monthly turnover 908 1,009 ======= ======= Operating loss (a) (116) (444) Average monthly operating loss (a) (19) (63) ======= ======= Note (a): the Operating loss is stated inclusive of restructuring costs of £89,000 (December 2003: £114,000) but exclusive of Group management charges. Future Strategy Volvere's strategy remains to seek activist or turnaround investment situations which the directors believe will enhance shareholder value. Future acquisitions and investments may be made in other areas unrelated to Vectra's core activities. Summary The Board is pleased with the turnaround in Vectra, the full effects of which are expected to be seen in 2005. Lord Kalms, Chairman 13 September 2004 CONSOLIDATED PROFIT AND LOSS ACCOUNT 20 November 1 January to 2 Period to 30 2002 to 31 July 2004 June 2003 December 2003 Unaudited Unaudited Audited Note £000 £000 £000 Turnover 2 5,447 1,314 7,061 Cost of sales (3,052) (999) (4,090) --------- --------- --------- Gross profit 2,395 315 2,971 Administrative Expenses: Other (2,690) (467) (3,768) Realisation of negative goodwill 38 - 1,252 Exceptional - (92) - --------- --------- --------- (2,652) (559) (2,516) --------- --------- --------- Group operating (loss)/profit before finance charges (257) (244) 455 --------- --------- --------- Interest receivable 39 58 91 --------- --------- --------- (Loss)/profit on ordinary activities before and after tax (218) (186) 546 ========= ========= ========= (Loss)/Earnings per share Basic 5 (6.02p) (6.1p) 16.53p Diluted 5 (6.02p) (6.1p) 15.44p The operating loss for the period arose from the Group's continuing operations. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 20 November 1 January to 2 Period to 30 2002 to 31 July 2004 June 2003 December 2003 Unaudited Unaudited Audited £000 £000 £000 (Loss)/profit for the period (218) (186) 546 Total recognised gains/(losses) recognised since last financial statements (218) (186) 546 ========= ========= ========= CONSOLIDATED BALANCE SHEET 31 December 2 July 2004 30 June 2003 2003 Unaudited Unaudited Audited Note £'000 £'000 £'000 FIXED ASSETS Intangible fixed assets - negative goodwill 3 (112) (1,357) (150) Tangible fixed assets 178 231 215 ---------- ---------- ---------- 66 (1,126) 65 ========== ========== ========== CURRENT ASSETS Stocks - - 5 Debtors 4 3,213 4,178 2,937 Cash at bank and in hand 3,015 2,136 3,283 ---------- ---------- ---------- 6,228 6,314 6,225 CREDITORS: amounts falling due within one year (2,461) (1,919) (2,289) ---------- ---------- ---------- NET CURRENT ASSETS 3,767 4,395 3,936 ---------- ---------- ---------- TOTAL ASSETS LESS CURRENT LIABILITIES 3,833 3,269 4,001 ========== ========== ========== CAPITAL AND RESERVES Called up share capital 50 50 50 Share premium account 50 3,405 - Profit and loss account 3,733 (186) 3,951 ---------- ---------- ---------- EQUITY SHAREHOLDERS' FUNDS 3,833 3,269 4,001 ========== ========== ========== CONSOLIDATED CASH FLOW STATEMENT 20 November 1 January to 2 Period to 30 2002 to 31 July 2004 June 2003 December 2003 Unaudited Unaudited Audited £000 £000 £000 Net cash (outflow)/inflow from operating activities (346) 188 1,356 Returns on investment and servicing of finance Interest received 39 58 91 Capital expenditure and financial investment Purchase of tangible fixed assets (14) (5) (64) Sale of tangible fixed assets 3 - 5 Acquisitions and disposals Purchase of Vectra - (1,560) (1,560) ---------- ---------- ---------- Cash outflow before management of liquid resources and financing (318) (1,319) (172) Financing Issue of ordinary share capital 50 3,610 3,610 Costs associated with issue of share capital - (155) (155) ---------- ---------- ---------- (Decrease)/increase in cash in period (268) 2,136 3,283 ========== ========== ========== RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH FLOW FROM OPERATING ACTIVITIES 20 November 1 January to 2 Period to 30 2002 to 31 July 2004 June 2003 December 2003 Unaudited Unaudited Audited £000 £000 £000 Operating (loss)/profit (257) (244) 455 Depreciation 48 10 80 Realisation of negative goodwill (38) - (1,252) (Gain)/loss on sale of fixed assets - - 1 Decrease/(increase) in stocks 5 - (5) (Increase)/decrease in debtors (276) 163 1,489 Increase in creditors 172 259 588 --------- --------- --------- Net cash (outflow)/inflow from operating activities (346) 188 1,356 ========= ========= ========= RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 20 November 1 January to 2 Period to 30 2002 to 31 July 2004 June 2003 December 2003 Unaudited Unaudited Audited £000 £000 £000 (Decrease)/increase in cash in period (268) 2,136 3,283 Net funds at start of period 3,283 - - --------- --------- --------- Net funds at end of period 3,015 2,136 3,283 ========= ========= ========= The Group had no debt during the period or at the period end. RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS 20 November 1 January to 2 Period to 30 2002 to 31 July 2004 June 2003 December 2003 Unaudited Unaudited Audited £000 £000 £000 Opening shareholders' funds 4,001 50 - Issue of share capital 50 3,560 3,610 Expenses associated with issue of share capital - (155) (155) (Loss)/profit for the period (218) (186) 546 --------- --------- --------- Closing shareholders' funds 3,833 3,269 4,001 ========= ========= ========= NOTES TO INTERIM REPORT 1. The financial information contained in this interim report does not constitute statutory accounts within the meaning of s240 of the Companies Act 1985, and has not been audited or reviewed. The interim report has been prepared on the basis of accounting policies expected to be applied consistently for the foreseeable future, of which the principal ones are explained below. The interim report was approved by the directors on 13 September 2004. 2. Turnover Turnover is recognised on a basis appropriate to the income source. Turnover 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 of the relevant contract. 3. Intangible asset - negative goodwill Negative goodwill, representing the excess of the fair value of the separable net assets acquired over the fair value of the consideration given, is capitalised as an intangible asset and credited to the profit and loss account over the periods in which the assets acquired are consumed or realised as cash. 4. Debtors Debtors includes amounts recoverable under contracts of £1,361,000 (30 June 2003: £1,228,000). 5. Earnings per share The basic and diluted loss per share are based on the loss on ordinary activities after taxation of the company attributable to ordinary shareholders of £218,000 (30 June 2003: £186,000) and on 3,618,699 shares (30 June 2003: 3,066,982), being the weighted average number of ordinary shares in the period. At the end of the period 3,638,705 (30 June 2003: 3,609,720) ordinary shares were in issue. In addition, 100,000 convertible shares were in issue and options for 145,691 shares. FRS14 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss making company with outstanding share options net loss per share would only be increased by the exercise of out-of-the-money share options. Since it seems inappropriate to assume that option holders would act irrationally, no adjustment has been made to diluted EPS for out-of-the-money share options. 6. Dividend The Board is not recommending payment of an interim dividend for the period ended 2 July 2004. 7. The interim report will be sent to shareholders shortly and will be available from the Company's registered office at 9-11 Grosvenor Gardens, London SW1W 0BD. This information is provided by RNS The company news service from the London Stock Exchange

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