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Volvere PLC (VLE)

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Thursday 27 September, 2018

Volvere PLC

Half-year Report

RNS Number : 0899C
Volvere PLC
27 September 2018
 

 

-

27 September 2018

 

 

 

Volvere plc

 

("Volvere" or the "Group")

 

Interim Results for the six months ended 30 June 2018

 

Volvere plc (AIM: VLE), the growth and turnaround investment company, announces its unaudited Interim Results for the six months ended 30 June 2018.

 

Highlights

 

£ million except where stated

Six months ended

Year ended

 

30 June

2018

30 June

2017

 

31 December

2017

Group revenue

22.2

18.5

43.4

 

Group profit before tax

 

1.28

 

0.76

 

3.5

 

 

As at
30 June 2018

As at
30 June 2017

As at 31
December 2017

Consolidated net assets per share
(excluding non-controlling interests)(1)

 

£6.75

 

£6.23

 

£6.59

Group net assets

26.9

26.9

26.1

Cash and marketable securities

20.4

20.5

18.5

 

 

 

 

 

·      Impetus Automotive again delivered a strong performance. Profit before tax and intra-group management and interest charges(2) was £1.92 million (30 June 2017: £1.54 million) on revenue of £14.82 million (30 June 2017: £12.16 million).  Profit before tax was £1.79 million (30 June 2017: £1.37 million) - with the difference being intra-group management and interest charges.

 

·      Shire Foods' performance improved slightly over the comparable prior period and was in line with expectations.  Loss before tax and intra-group management and interest charges(2) was £0.17 million (30 June 2017: £0.24 million) on revenue of £7.25 million (30 June 2017: £6.28 million).  Loss before tax was £0.19 million (30 June 2017: £0.25 million) - with the difference being intra-group management and interest charges.

 

·      Record net assets per share(1) of £6.75.

 

·      Balance sheet remains strong with high liquidity. Cash and marketable securities in line with prior comparable period at £20.4 million, in spite of the impact of the £3.4 million share buy-back in October 2017 and an increase of £2.0 million against £18.5 million as at 31 December 2017.

 

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 (which were 3,668,363 at 30 June 2018, 4,075,958 at 30 June 2017 and 3,668,363 at 31 December 2017).

 

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

 

N+1 Singer

Aubrey Powell/Lauren Kettle/Iqra Amin

 

 

Tel: + 44 (0) 20 7496 3000

 

 

 

 

 

Chairman's Statement

 

I'm delighted to report an excellent set of results for the first half of 2018.  Impetus Automotive performed strongly, with the performance of Shire Foods in line with our expectations.  Net assets per share have reached a new record of £6.75* (30 June 2017: £6.23, 31 December 2017: £6.59).  We are confident about the outlook for our businesses for the remainder of 2018.

 

 

David Buchler

Chairman

 

27 September 2018

 

*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 7.

 

 

 

Chief Executive's Statement

 

The Group achieved record revenues and profits during the first half of 2018.  Total revenue reached £22.2 million (30 June 2017: £18.54 million) and profit before tax was £1.28 million (30 June 2017: £0.76 million).

 

This excellent performance was principally as a result of a very strong performance by Impetus, our automotive consulting business.  Shire and SDS met our expectations for the period, with both performing better than in the same period in 2017.   The performance of each of the Group's segments is set out below.

 

Automotive Consulting

 

Impetus Automotive Limited ("Impetus"), which was acquired in March 2015, is approximately 83%-owned by the Group.  Impetus's activity is the provision of consulting and related services to the automotive sector, principally vehicle manufacturers and their national sales companies.  The company employs approximately 420 people.  Its largest clients are Volkswagen Group, Toyota, BMW and Jaguar Land Rover.

 

For the 6 months to 30 June 2018 revenues and profit before tax and intra-Group interest and management charges** were £14.82 million and £1.92 million respectively (30 June 2017: £12.16 million, profit £1.54 million; year to 31 December 2017: £27.27 million, profit £3.60 million).  Profit before tax was £1.79 million (30 June 2017: £1.37 million, year to 31 December 2017: £3.27 million) - with the difference being intra-group interest and management charges.

 

When we acquired Impetus 3½ years ago, the company employed 200 staff and revenues were approximately £15m.  Since then, the revenues and workforce have doubled. This performance reflects the hard work by our staff and management team in building profitable, sustainable work streams with clients.  We have been notably successful in winning new business in providing training services and recently won a second contract with another large automotive manufacturer.  We cannot expect, however, that the company will maintain in the short term the same significant growth rate it has shown to date, when there is some uncertainty in the sector -  and particularly in the UK because of Brexit.  However, the sheer size of the automotive market - and our strength in the aftersales, research, training and fleet sales segments in particular - is such that we believe that there is plenty of room for Impetus to grow in the future and to continue to prosper.

 

Food manufacturing

 

This segment comprises Shire Foods Limited ("Shire"), the Group's 80%-owned frozen pie and pasty manufacturing business, which was acquired in 2011.  The company employs approximately 140 people and is based in Leamington Spa, United Kingdom.

 

First-half revenues reached £7.25 million and there was a loss before tax and intra-Group management and interest charges** of £0.17 million (30 June 2017: £6.28 million and £0.24 million; 31 December 2017 £15.87 million, profit £0.64 million).  Loss before tax was £0.19 million (30 June 2017: £0.25 million, 31 December 2017: profit £0.44 million) - with the difference being intra-group interest and management charges.  Given that Shire's revenues are weighted towards the colder winter months we expect that its performance will improve in the second half of the year.

 

Shire's revenues in the period were the highest they have been during the Group's ownership, for what is the seasonally slower part of the year.  However, gross margins have reduced over the last few years because of the rise in factory wages and raw material price increases, exacerbated by the effects of Sterling depreciation and the lower availability of labour after the Brexit vote in June 2016.  In order to strengthen Shire's operational performance through margin enhancement and capacity growth, as well as to facilitate new product development, we have committed in 2018 to capital investment totalling £0.95 million.  The introduction of this new equipment is largely complete and we should see the benefits of it increasingly in future months.

 

Security solutions

 

Sira Defence and Security Limited ("SDS"), our security solutions business delivered a satisfactory performance, with revenue of £0.12 million (30 June 2017: £0.1 million, 31 December 2017: £0.28 million).  The company achieved a breakeven result before tax (30 June 2017: loss £0.03 million, year to 31 December 2017: profit £0.47 million).

 

We signed a number of licencing agreements in the period where our software is embedded in much larger systems. These agreements generally have a minimum revenue guarantee together with a performance-based component. The sales lead times into public sector clients remain long, but we expect some of these agreements to generate further revenues for us this year or in early 2019.

 

Further segmental information is set out in the financial review below and in note 2.

 

Purchase of own shares

 

The Group has not acquired any further shares for treasury since the large share buy-back in October 2017.  As of 30 June 2018, since the start of its buyback programme, the Group has returned £9.4 million to shareholders.

 

Acquisitions and future strategy

 

Although through the first half of 2018 deal flow has remained steady, we did not identify any opportunities which we deemed worthy of investment.  We have seen a greater number of under-performing or failing businesses in the retail and casual dining sectors where there remains over-capacity and cost pressures.

 

Our current businesses could be affected by turmoil in the lead up to, and following, Brexit.  However, in the case of Impetus, we believe there is the opportunity to prosper within a dynamic automotive environment and prospects of further growth.  In the case of Shire, we are taking steps to minimise any disruption to our supply chain but we are dependent on our supply chain doing the same.  Volvere may perhaps, on balance, be one of the very few businesses to benefit from Brexit-led distress, provided it does not endure too long. We will of course assess any opportunities as they arise.

 

The loyalty and hard work of all the Group's employees is what generates our performance and our basis for growth.  I am very grateful to all of them and look forward to delivering a strong second half to 2018.

 

 

Jonathan Lander

Chief Executive

 

27 September 2018

 

**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.

 

 

 

Financial Review

 

This financial review covers the Group's performance during the period ended 30 June 2018.  It should be read in conjunction with the Chairman's and Chief Executive's Statements.

 

Overview

 

Group revenue for the period grew by approximately 20% to £22.20 million from £18.54 million in the prior comparable period (31 December 2017: £43.42 million).  The increase of £3.66 million arose from growth in both Impetus and Shire Foods, as explained below.

 

Group profit before tax was £1.28 million (30 June 2017: £0.76 million, year to 31 December 2017: £3.45 million).  The increase, against the comparable period last year, reflects an increase in profit at Impetus, reduced losses at Shire Foods and a breakeven result in SDS which was previously loss-making.

 

Further comment on each segment is set out below and detailed information about the Group's segments is set out in note 3 to these interim results, which should be read in conjunction with this financial review.

 

Automotive Consulting

 

Impetus has been a member of the Group since March 2015.  A summary of its recent financial performance is set out in Table A below.

 

Table A

 

 

6 months to

30 June

2018

6 months to

30 June

2017

Year ended

31 December

2017

Year ended

31 December

2016

Year ended

31 December

2015(1)

 

 

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

Revenue

 

 

14,824

12,163

27,265

17,372

12,077

 

 

 

 

 

 

 

 

Profit before tax, Group interest and management charges(2)

 

 

 

1,921

 

1,536

 

3,604

 

1,485

 

583

 

Profit before tax(2)

 

 

 

1,789

 

1,369

 

3,270

 

1,114

 

304

 

 

 

 

 

 

 

(1)  Reflects the period from acquisition on 25 March 2015 to 31 December 2015

(2)  The difference between profit before tax and profit before tax, Group interest and management charges relates to Group interest and management charges

 

At the start of the second quarter of 2017 Impetus commenced managing the training and development centre for a large client.  Since 1 September 2018, Impetus has taken management responsibility for a second manufacturer's smaller training academy and look forward to continuing to focus on, and growing further, in this important area.

 

Revenue growth against the comparable period in 2017 is due principally to the full-period contribution of the training and development centre contract, which has also had a corresponding effect on underlying profitability.

 

During the period the Group charged Impetus £0.13 million for management services but no interest was payable in view of the repayment during 2017 of all Group loans.  At the end of June 2017, Group loans outstanding had amounted to £1.24 million.

 

Impetus declared dividends totalling £0.29 million during the first half of 2018, of which the Group's share was £0.24 million.  The Group owns approximately 83% of Impetus.

 

Food manufacturing

 

A summary of Shire's recent financial performance is set out in Table B below.

 

 

Table B

 

6 months to

30 June

2018

£'000

 

6 months to

30 June

2017

£'000

Year ended 31 December

2017

£'000

Year ended 31 December

2016

£'000

Year ended 31 December

2015

£'000

 

 

 

 

 

 

Revenue

7,252

6,280

15,869

15,190

15,476

 

 

 

 

 

 

 

 

 

 

 

 

(Loss)/profit before tax, intra-group management and interest charges

 

(173)

 

(237)

 

635

 

1,149

 

1,588

 

Intra-group management and interest charges

 

(15)

 

(15)

               

(200)

 

(240)

 

(423)

 

 

 

 

 

 

 

Profit before tax

 

(188)

 

(252)

 

435

 

909

 

1,165

 

 

 

 

 

 

 

Shire's revenue grew by more than 15% compared to the same period in 2017.  However, the upward pressure on raw material prices (principally as a result of Sterling's weakness), coupled with the pressure from customers to avoid increasing selling prices, has reduced gross margins.  We continue to believe that, over time, with the uncertainty surrounding Brexit reduced, the company will see a return to a more normal trading environment.

 

In the meantime, we have committed to investing almost £1 million in Shire to increase capacity and reduce wastage.  The investments themselves are not a panacea for improving performance, but rather provide greater flexibility to manufacture different product formats, to increase throughput and to drive process improvements which, in turn, will reduce wastage and increase margins.

 

At 30 June 2018, there were no outstanding Group loans.  However, given the cashflows associated with the procurement of the aforementioned capital expenditure pending lease refinancing, we expect to make further loans to Shire during the final quarter of 2018.  The equity investment and related intellectual property investments made of £0.53 million and £0.44 million respectively, brings the Group's total amount invested (excluding loans) to date to £0.97 million.

 

Shire's unaudited net assets at the period end amounted to £5.99 million (30 June 2017: £5.39 million; 31 December 2017: £6.18 million), of which 20% is attributable to non-controlling interests.

 

Investment revenues and other gains and losses and finance income and expense

 

The Group disposed of available-for-sale investments during the period as part of its treasury management policy for total consideration of £3.21 million.  Investment revenues arising amounted to £0.08 million (30 June 2017: £nil million, 31 December 2017: £0.09 million).

 

The Group's net finance expense was £0.04 million (30 June 2017: £0.05 million, 31 December 2017: £0.13 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.

 

Statement of financial position

 

Cash

 

Cash at the period end amounted to £17.43 million (30 June 2017: £14.36 million, 31 December 2017: £12.12 million).  The increase in cash compared to the end of 2017 was due to the disposal of available-for-sale investments as noted above, along with the effects of underlying trading.  Details of cash movements are shown in the consolidated statement of cash flows.

 

Available-for-sale investments

 

At the period end the Group had available-for-sale investments with a market value of £2.99 million (30 June 2017: £6.16 million, 31 December 2017: £6.34 million) with a base cost of £3.03 million.  The unrealised loss has been dealt with through reserves and included in the consolidated statement of comprehensive income.  The Group's disposal of available-for-sale investments during the first half of 2018 gave rise to an overall realised loss of £0.02 million on original cost, or £0.19 million compared to the valuation at the 2017 year end.  The loss arising on the prior year unrealised gain has been recycled through the income statement.

 

In line with the Group's treasury management policies and pending investment in other acquisitions, the Group continues to consider short-term investments where there is the opportunity for attractive returns.

 

Earnings per share and share capital

 

Total basic and diluted earnings per ordinary share were 19.3 pence (30 June 2017: 8.2 pence; year ended 31 December 2017: 56.4 pence).

 

New IFRS implementation

 

IFRS 15 Revenue from Contracts with Customers is effective from periods beginning on or after 1 January 2018.  The standard has been adopted by the Group for the first time in the period ending 30 June 2018.  In the Automotive consulting segment, revenue on certain fixed-price contracts was recognised in line with the stage of completion of the contracts.  In 2018, such revenue would be recognised upon the completion of specific deliverables.  As part of the review for restatement of the comparative results, there were no material restatements identified as required in respect of such prior information.

 

Hedging

 

It is not the Group's policy to enter into derivative instruments to hedge interest rate or foreign exchange risk.

 

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 3.

 

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; in the automotive consulting segment staff utilisation, amounts billed to clients and cash collected are closely monitored; 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.  These are set out more fully in the Group's Annual Report.  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 services that are dependent on the continued employment of the Group's employees and availability of suitable, profitable workload.  Also, in the automotive consulting and food manufacturing segments, there is a dependency on a small number of customers and a reduction in the volume or range of products or services supplied to those customers or the loss of any one of them could impact the Group materially.

 

These risks are managed by the Board in conjunction with the management of the Group's businesses.

 

Nick Lander

Chief Financial & Operating Officer

 

27 September 2018

 

 

 

Consolidated income statement

 

 

 

 

 

 

Note

6 months to

30 June

2018

6 months to

30 June

2017

Year ended

31

December

2017

 

 

£'000

£'000

£'000

Continuing operations

 

 

 

 

Revenue

3

22,198

18,540

43,418

Cost of sales

 

(17,703)

(14,732)

(33,693)

 

 

 

 

 

Gross profit

 

4,495

3,808

9,725

 

 

 

 

 

Distribution costs

 

(469)

(431)

(974)

Administrative expenses

 

(2,758)

(2,569)

(5,264)

 

 

 

 

 

Operating profit

 

1,268

808

3,487

 

 

 

 

 

Investment revenues

 

76

-

93

Other gains and losses

4

(23)

-

-

Finance expense

5

(70)

(74)

(164)

Finance income

5

29

22

38

 

 

 

 

 

Profit before tax

 

1,280

756

3,454

Income tax expense

 

(371)

(290)

(675)

 

 

 

 

 

Profit for the period

 

909

466

2,779

 

 

 

 

 

Attributable to:

 

 

 

 

- Equity holders of the parent

 

706

333

2,251

- Non-controlling interests

8

203

133

528

 

 

 

 

 

 

 

909

466

2,779

 

 

 

 

 

Earnings per share

6

 

 

 

 

 

 

 

 

Total

 

 

 

 

- Basic

 

19.3p

8.2p

56.4p

- Diluted

 

19.3p

8.2p

56.4p

 

 

 

 

 

 

 

 

 

Consolidated statement of comprehensive income

 

 

 

6 months to

30 June

2018

6 months to

30 June

2017

Year ended

31

December

2017

 

 

£'000

£'000

£'000

 

 

 

 

 

Profit for the period

 

909

466

2,779

 

 

 

 

 

Other comprehensive income (items that will be reclassified to profit or loss)

 

 

 

 

 

 

 

 

 

Fair value gains and losses on available-for-sale financial assets

 

 

 

 

- current period gains/(losses)

 

75

(102)

77

- reclassified to profit and loss

 

(188)

-

-

 

Revaluation of property

Deferred tax recognised on revaluation of property

 

 

-

-

 

-

-

 

260

(135)

 

Foreign exchange (losses)/gains on retranslation of foreign operations

 

-

(5)

(6)

 

 

 

 

 

Other comprehensive income

 

(113)

(107)

196

 

 

 

 

 

Total comprehensive income for the period

 

796

359

2,975

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

 

 

Equity holders of the parent

 

593

227

2,423

Non-controlling interests

 

203

132

552

 

 

796

359

2,975

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

Six months to 30 June 2018

Share

capital

£'000

Share

premium

£'000

 

Revaluation

reserves

£'000

Retained

earnings

£'000

Total

£'000


Non-controlling

interests
£'000

Total

£'000

 

 

 

 

 

 

 

 

Other comprehensive income

-

-

(113)

-

(113)

-

(113)

Profit for the period

-

-

-

706

706

203

909

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

(113)

706

593

203

796

Balance at 1 January

50

3,640

177

20,319

24,186

1,958

26,144

Transactions with owners:

 

 

 

 

 

 

 

Dividend paid by subsidiary

-

-

-

-

-

(50)

(50)

 

 

 

 

 

 

 

 

Total transactions with owners

-

-

-

-

-

(50)

(50)

 

 

 

 

 

 

 

 

Balance at 30 June

50

3,640

64

21,025

24,779

2,111

26,890

 

Six months to 30 June 2017

Share

capital

£'000

Share

premium

£'000

 

Revaluation

reserves

£'000

Retained

earnings

£'000

Total

£'000


Non-controlling

interests
£'000

Total

£'000

 

 

 

 

 

 

 

 

Other comprehensive income

-

-

(102)

(4)

(106)

(1)

(107)

Profit for the period

-

-

-

333

333

133

466

 

 

 

 

 

 

 

 

Total comprehensive income for the period

-

-

(102)

329

227

132

359

Balance at 1 January

50

3,640

-

21,529

25,219

1,406

26,625

Transactions with owners:

 

 

 

 

 

 

 

Purchase of own shares

-

-

-

(54)

(54)

-

(54)

 

 

 

 

 

 

 

 

Total transactions with owners

-

-

-

(54)

(54)

-

(54)

 

 

 

 

 

 

 

 

Balance at 30 June

50

3,640

(102)

21,804

25,392

1,538

26,930

 

Year ended 31 December 2017

Share

capital

£'000

Share

premium

£'000

 

Revaluation

reserves

£'000

Retained

earnings

£'000

Total

£'000


Non-controlling

interests
£'000

Total

£'000

 

 

 

 

 

 

 

 

Other comprehensive income

-

-

177

(5)

172

24

196

 

 

 

 

 

 

 

 

Profit for the year

 

-

 

-

 

-

 

2,251

 

2,251

 

528

 

2,779

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

-

-

177

2,246

2,423

552

2,975

 

Balance at 1 January

50

3,640

-

21,529

25,219

1,406

26,625

 

Transactions with owners:

 

 

 

 

 

 

 

Purchase of own shares

-

-

-

(3,458)

(3,458)

-

(3,458)

Share based payments

-

-

-

2

2

-

 

2

 

 

 

 

 

 

 

 

Total transactions with owners

-

-

-

(3,456)

(3,456)

-

(3,456)

 

 

 

 

 

 

 

 

Balance at 31 December

50

3,640

177

20,319

24,186

1,958

26,144

 

 

 

Consolidated statement of financial position

 

 

 

30 June

2018

30 June

2017

31 December

2017

 

Note

£'000

£'000

£'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Goodwill

 

380

380

380

Other intangible assets

 

-

24

8

Property, plant & equipment

 

5,296

5,559

5,424

 

 

 

 

 

Total non-current assets

 

5,676

5,963

5,812

 

 

 

 

 

Current assets

 

 

 

 

Inventories

 

2,291

2,396

1,466

Trade and other receivables

 

8,176

6,864

10,104

Cash and cash equivalents

 

17,430

14,361

12,119

Available for sale investments

 

2,994

6,156

6,335

 

 

 

 

 

Total current assets

 

30,891

29,777

30,024

 

 

 

 

 

Total assets

 

36,567

35,740

35,836

 

 

 

 

 

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

Loans and other borrowings

 

(96)

(596)

(783)

Finance leases

 

(192)

(161)

(192)

Trade and other payables

 

(6,888)

(5,565)

(6,023)

Tax payable

 

(386)

(266)

(433)

 

 

 

 

 

Total current liabilities

 

(7,562)

(6,588)

(7,431)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Loans and other borrowings

 

(1,306)

(1,401)

(1,353)

Finance leases

 

(221)

(361)

(315)

 

 

 

 

 

Total non-current liabilities

 

(1,527)

(1,762)

(1,668)

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

(9,089)

(8,350)

(9,099)

 

 

 

 

 

Provisions - deferred tax

 

(514)

(376)

(514)

Provisions - lease incentive

 

(74)

(84)

(79)

 

 

 

 

 

 

 

 

 

 

NET ASSETS

 

26,890

26,930

26,144

 

 

 

 

 

Equity

 

 

 

 

Share capital

 

50

50

50

Share premium account

 

3,640

3,640

3,640

Revaluation reserves

 

64

(102)

177

Retained earnings

 

21,025

21,804

20,319

 

 

 

 

 

Capital and reserves attributable to equity holders of the Company

 

24,779

25,392

24,186

Non-controlling interests

8

2,111

1,538

1,958

 

 

 

 

 

TOTAL EQUITY

 

26,890

26,930

26,144

 

 

 

 

 

 

 

 

Consolidated statement of cash flows

 

 

 

6 months to 30 June 2018

 

6 months to 30 June 2018

 

6 months to 30 June 2017

 

6 months to 30 June 2017

 

 

Year ended 31 December 2017

 

 

Year ended 31 December 2017

 

Note

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Profit for the period from continuing operations

 

 

909

 

466

 

2,779

Adjustments for:

 

 

 

 

 

 

 

Investment revenues

 

(76)

 

-

 

(93)

 

Other gains and losses

4

23

 

-

 

-

 

Finance expense

5

70

 

74

 

164

 

Finance income

5

(29)

 

(22)

 

(38)

 

Depreciation

 

239

 

228

 

664

 

Amortisation of intangible assets

 

14

 

16

 

31

 

Foreign exchange differences

 

-

 

(6)

 

7

 

Loss on disposal of property, plant and equipment

 

-

 

7

 

7

 

Share-based payment expense

7

-

 

-

 

2

 

Income tax expense

 

371

 

290

 

675

 

 

 

 

 

 

 

 

 

 

 

 

612

 

587

 

1,419

 

 

 

 

 

 

 

 

Operating cash flows before movements in working capital

 

 

1,521

 

1,053

 

4,198

 

 

 

 

 

 

 

 

Decrease/(increase) in trade and other receivables

 

 

1,928

 

368

 

(2,873)

Increase in trade and other payables

 

 

847

 

1,127

 

1,582

(Increase)/decrease in inventories

 

 

(825)

 

(314)

 

616

Tax paid

 

 

(424)

 

(208)

 

(422)

 

 

 

 

 

 

 

 

Cash generated from operations

 

 

3,047

 

2,026

 

3,101

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

Proceeds from sale of discontinued operations net of cash sold

 

-

 

-

 

-

 

Purchase of available-for-sale investments

 

-

 

(6,258)

 

(6,258)

 

Income from available-for-sale investments

 

76

 

-

 

93

 

Disposal of available-for-sale investments

 

3,205

 

-

 

-

 

Purchase of property, plant and equipment

 

(117)

 

(222)

 

(190)

 

Disposal of property, plant and equipment

 

-

 

-

 

-

 

Interest received

 

 

29

 

 

22

 

 

38

 

 

 

 

 

 

 

 

 

 

Net cash generated from/(used by) investing activities

 

 

3,193

 

(6,458)

 

(6,317)

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

Interest paid

 

(70)

 

(74)

 

(164)

 

Purchase of own shares (treasury shares)

8

-

 

(54)

 

(3,458)

 

Dividend paid by subsidiary

 

(50)

 

-

 

-

 

(Repayment of)/net new borrowings

 

(828)

 

(1,143)

 

(1,093)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash used by financing activities

 

 

 

(948)

 

 

(1,271)

 

 

(4,715)

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash

 

 

5,292

 

(5,703)

 

(7,931)

 

Cash at beginning of period

 

 

12,119

 

20,063

 

20,063

Foreign exchange revaluation of opening cash

 

 

19

 

1

 

(13)

 

 

 

 

 

 

 

 

Cash at end of period

 

 

17,430

 

14,361

 

12,119

 

 

 

 

 

 

 

 

 

 

Volvere plc

 

Notes forming part of the unaudited interim results for the period ended 30 June 2018

 

1          Financial information and basis of accounting

 

These interim financial statements have been prepared using accounting policies consistent with IFRSs as adopted by the European Union.

 

These interim financial statements should be read in accordance with the Group's last annual consolidated financial statements as and for the year ended 31 December 2017.  They do not include all the information required for a complete set of IFRS financial statements.  However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements.  AIM-listed companies are not required to comply with IAS 34 Interim Financial Reporting and accordingly the Group has taken advantage of this exemption.

 

This is the first set of the Group's financial statements where IFRS 15 and IFRS 9 have been applied.  Changes to significant accounting policies are described in Note 2.

 

The comparative figures for the year ended 31 December 2017 have been prepared under IFRS.  They do not constitute statutory accounts as defined by the Companies Act 2006.  The accounts for the 12 months ended 31 December 2017 received an unmodified auditor's report and have been filed with the Registrar of Companies.

 

Copies of this statement will be available to members of the public at the Company's registered office: Warnford Court, 29 Throgmorton Street, London EC2N 2AT and on its website www.volvere.co.uk.

 

2          Changes in significant accounting policies

 

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2017.

 

The changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 31 December 2018.

 

The Group has initially adopted IFRS 15 Revenue from Contracts with Customers from 1 January 2018.  This has meant considering the requirement to restate the comparative results for the year ending 31 December 2017.  In assessing this requirement, the Group did not identify any contracts that would have resulted in material restatement of the Group's comparative results.

 

The Automotive and Security solutions segments are affected by the adoption of the new standard.  The effect of initially applying this standard has had no material effect on the Group's financial statements.

 

Explanation of significant areas for adjustment

 

The potential significant area for adjustment relates to the recognition of revenue on fixed price consulting contracts where the final deliverable is the performance obligation.  Previously, revenue would have been recognised in line with the stage of completion.

 

IFRS 16 Leases has not been adopted in 2018 but will be with effect from 1 January 2019.  The effects on the presentation of the Group's results arising from the adoption of IFRS 16 has not been established at the present time.

 

3          Operating segments

 

Analysis by business segment (excluding intra-Group interest and management charges and balances):

 

Analysis by business segment:

 

 

 

 

 

 

 

 

 

Period ended 30 June 2018

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

 

 

 

 

 

 

 

 

Revenue

14,824

122

7,252

-

22,198

-

22,198

 

 

 

 

 

 

 

 

Profit/(loss) before tax(1)

1,921

6

(173)

(474)

1,280

-

1,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period ended 30 June 2017

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

 

 

 

 

 

 

 

 

Revenue

12,163

97

6,280

-

18,540

-

18,540

 

 

 

 

 

 

 

 

Profit/(loss) before tax(1)

1,536

(25)

(237)

(518)

756

-

756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 31 December 2017

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

 

 

 

 

 

 

 

 

Revenue

27,265

284

15,869

-

43,418

-

43,418

 

 

 

 

 

 

 

 

Profit/(loss) before tax(1)

3,604

47

635

(832)

3,454

-

3,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 30 June 2018

 

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

 

 

 

 

 

 

 

 

Assets

9,647

280

10,383

16,257

36,567

-

36,567

Liabilities/provisions

(4,852)

(240)

(4,393)

(192)

(9,677)

-

(9,677)

 

 

 

 

 

 

 

 

Net assets(2)

4,795

40

5,990

16,065

26,890

-

26,890

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                                   
 

 

As at 30 June 2017

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

 

 

 

 

 

 

 

 

 

 

Assets

7,411

214

9,670

18,445

35,740

-

35,740

 

Liabilities/provisions

(4,054)

(246)

(4,278)

(232)

(8,810)

-

(8,810)

 

 

 

 

 

 

 

 

 

 

Net assets(2)

3,357

(32)

5,392

18,213

26,930

-

26,930

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31 December 2017

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

 

 

 

 

 

 

 

 

 

 

Assets

8,305

247

10,819

16,465

35,836

-

35,836

 

Liabilities/provisions

(4,593)

(215)

(4,640)

(244)

(9,692)

-

(9,692)

 

 

 

 

 

 

 

 

 

 

Net assets(2)

3,712

32

6,179

16,221

26,144

-

26,144

 

 

 

 

 

 

 

 

 

 

(1) stated before intra-Group interest and management charges

 (2) assets and liabilities stated excluding intra-Group balances

 

 

 

 

 

 

 

 

 

Six months to 30 June 2018

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

Capital spend

16

-

101

-

117

-

117

Depreciation

14

-

224

1

239

-

239

Amortisation/Impairment

14

-

-

-

14

-

14

Interest income (non-Group)

-

-

-

29

29

-

29

Interest expense (non-Group)

18

-

52

-

70

-

70

Tax expense

377

(6)

-

-

371

-

371

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months to 30 June 2017

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

Capital spend

9

7

206

-

222

-

222

Depreciation

20

-

208

-

228

-

228

Amortisation/Impairment

16

-

-

-

16

-

16

Interest income (non-Group)

-

-

-

22

22

-

22

Interest expense (non-Group)

20

-

54

-

74

-

74

Tax expense

290

-

-

-

290

-

290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 31 December

2017

 

Automotive consulting

£'000

 

Security solutions

£'000

 

Food manufacturing

£'000

Investing and management services

£'000

 

Total continuing

£'000

 

 

Discontinued

£'000

 

 

Total

£'000

Capital spend

34

6

223

-

263

-

263

Depreciation

48

3

613

-

664

-

664

Amortisation/Impairment

30

-

1

-

31

-

31

Interest income (non-Group)

-

-

-

38

38

-

38

Interest expense (non-Group)

44

-

120

-

164

-

164

Tax expense

650

-

25

-

675

-

675

 

 

 

 

 

 

 

 

                               

 

Geographical analysis:

 

 

External revenue by location of customers

 

Non-current assets by location of assets

 

6 months to

30 June

2018

6 months to

30 June

2017

Year ended

31 December 2017

 

30 June

2018

 

30 June

2017

 

31 December 2017

 

£'000

£'000

£'000

£'000

£'000

 

£'000

 

 

 

 

 

 

 

UK

20,306

16,249

38,550

5,676

5,963

5,812

Rest of Europe

1,246

1,557

3,403

-

-

-

Other

646

734

1,465

-

-

-

 

 

 

 

 

 

 

 

22,198

18,540

43,418

5,676

5,963

5,812

 

 

 

4          Other gains and losses

 

The Company's unrealised treasury investment losses at the end of the period amounted £36,000 and these have been dealt with through other comprehensive income.  During the period the Company disposed of certain other investments for a loss of £23,000 compared to the original cost; these investments had been revalued during the year ending 31 December 2017 and an unrealised gain of £188,000 had arisen and dealt with through reserves.  Upon sale this has been transferred to the income statement.

 

5          Finance expense/income

 

The Group's finance expense relates to the debt servicing costs in the Group's subsidiaries, Shire Foods Limited and Impetus Automotive Limited, offset by interest earned on the Group's cash deposits.

 

6          Earnings per share

 

The calculation of the basic and diluted earnings per share is based on the following data:

 

 

6 months to

30 June

2018

£'000

6 months to

30 June

2017

£'000

Year ended

31 December

2017

£'000

Earnings for the purposes of earnings per share:

 

 

 

 

 

 

 

From continuing operations

706

333

2,251

From discontinued operations

-

-

-

Total

706

333

2,251

 

 

 

 

 

 

No.

No.

Weighted average number of ordinary shares for the purposes of earnings per share:

 

 

 

Weighted average number of ordinary shares in issue

3,668,363

4,080,323

3,987,670

Dilutive effect of potential ordinary shares

-

-

-

Weighted average number of ordinary shares for diluted EPS

3,668,363

4,080,323

3,987,670

 

 

 

 

 

There were no share options (or other dilutive instruments) in issue during the period in respect of the parent company's shares (30 June 2017: nil; 31 December 2017: nil).

 

 

7          Non-controlling interests

 

The non-controlling interests of £2.11 million relate to the net assets attributable to the shares not held by the Group at 30 June 2018 in the following subsidiaries:

 

 

30 June

2018

£'000

30 June

2017

£'000

31 December 2017

£'000

 

 

 

 

NMT Group Limited

71

73

72

Shire Foods Limited

1,196

1,077

1,234

Impetus Automotive Limited

844

388

652

 

2,111

1,538

1,958

 

The Group owns approximately 83% Impetus and 80% of Shire Foods.

 

8          Purchase of own shares

 

The Company did not acquire any of its own Ordinary shares during the period (30 June 2017: 10,000 and 31 December 2017: 417,595).  For reference, the total number of Ordinary shares held in treasury is 2,538,711 and the number of shares in issue, excluding treasury shares, at the period end was 3,668,363 (30 June 2017: 4,075,958 and 31 December 2017: 3,668,363).

 

 

9          Dividend

 

The Board is not recommending the payment of an interim dividend for the period ended 30 June 2018.

 

- Ends -


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