REG - Volvere PLC - Final Results <Origin Href="QuoteRef">VLE.L</Origin> - Part 1
RNS Number : 5756OVolvere PLC29 May 2015
Press Release
29 May 2015
Volvere plc
("Volvere" or the "Group")
Final results for the year ended 31 December 2014
Volvere plc (AIM: VLE), the growth and turnaround investment company, announces its final results for the year ended 31 December 2014.
Highlights
million except where stated
As at 31
December 2014As at 31
December 2013As at
30 June 2014(unaudited)
Consolidated net assets per share
(excluding non-controlling interests)14.31
4.00
3.93
Group net assets
19.0
17.6
17.1
Cash and marketable securities
13.1
12.2
12.2
Year ended
Six months ended
31 December
2014
31 December
2013
30 June
2014
Group revenue from continuing businesses
24.1
16.1
9.8
Group profit/(loss) before tax from continuing operations
1.65
0.51
(0.29)
Group profit/(loss) before tax from continuing operations before one-off share-based payment expense, gain on bargain acquisition and exceptional credit
0.95
0.09
(0.14)
Note
1 Based on the net assets attributable to owners of the parent company and the respective period end shares in issue of 4,145,958, 4,259,958 and 4,155,958.
JMP's performance continued to be satisfactory with an underlying profit before tax of 0.6 million (excluding a one-off share-based payment charge) on revenue of 11.8 million.
Shire Foods' performance continued to strengthen with underlying profit before tax of 0.8 million (excluding an exceptional gain of 0.85 million) on increased revenue of 12.1 million.
Impetus Automotive Limited, acquired in March 2015, being integrated into the Group satisfactorily.
Balance sheet remains strong with high liquidity.
For further information:
Volvere plc
Jonathan Lander, CEO
Tel: +44 (0) 20 7634 9707
N+1 Singer
Aubrey Powell
Richard Salmond
Tel: + 44 (0) 20 7496 3000
Chairman's statement
I am pleased to report on the results for the year ended 31 December 2014.
All our businesses performed well in 2014 and this has contributed to the growth in net assets per share, achieving a new record of 4.31*. Our net assets per share have grown on average by approximately 14% per annum since the company's inception in 2002, which is a testament to the validity of our strategy, and of its execution.
We are looking forward to continued progress in 2015.
David Buchler
Chairman
28 May 2015*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 20
Chief Executive's statement
Introduction
2014 was the best operating result for the Group to date, albeit flattered by an exceptional gain in Shire Foods. In addition, all three of our principal subsidiaries made a positive contribution this year, which is especially pleasing.
Principal activities
The Company is a holding company that identifies and invests in undervalued and 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 transport planning & engineering, food manufacturing and security solutions and each of these is reported as a separate segment.
Operating review
The financial performance of each segment is summarised below and in the financial review and further detailed in note 5 to this announcement.
Transport planning & engineering
The Group acquired the JMP transport planning & engineering business in May 2013. JMP is a consultancy that supports the transport planning aspects of property and land development, as well as providing a range of design, engineering and travel behaviour services. In January 2014, JMP issued shares to certain members of its management team such that the Group's holding is now 76%.
The second half of 2014 was more profitable than the first as investments in people and systems started to show dividends. JMP was appointed to a number of important new framework agreements as well as winning a good share of project work. Of particular note was the re-appointment of the company in March by Transport Scotland as lead provider for development planning and management advisory and auditor services. Further national successes were achieved through framework team appointments to the Homes and Communities Agency (HCA) multi-disciplinary framework and on Highways England's Collaborative Delivery Framework (CDF), the mechanism for the delivery of the multi-billion pounds investment in strategic road network improvements announced by the Government in Q4 of 2014.
Revenue for the year was 11.76 million (period from acquisition to 31 December 2013: 7.41 million) with a profit before tax and Group interest charges of 0.45 million (2013: 1.11 million including 'one-off' profits of 0.54 million relating to the acquisition).Post year-end the company made further loan repayments totalling 0.40 million, which means we have now recovered our cost plus a further 0.23 million since the investment two years ago.
JMP is a business which is wholly dependent on hiring and retaining good people. We are delighted with the progress made in 2014 and are impressed by, and grateful to, the staff - who have made it happen.
Food manufacturing
Shire, in which the Group has an 80% stake, was acquired in 2011.Shire manufactures frozen pies, pasties and other pastry products for retailers and food service customers. This year was Shire's third full year of trading within the Group and its performance has continued to improve with a significant increase in revenue and profitability.
Shire's revenue for the year was 12.13 million (2013: 8.53 million) and it achieved a profit before tax of 1.65 million (2013: 0.12 million) including exceptional income of 0.85 million, as explained in the financial review below.
Revenue in 2014 was significantly higher than 2013 mainly because of some key account wins. This was the principal driver of the excellent financial result. There were also continued improvements in the quality and efficiency of our production and logistics.
As part of our turnaround strategy, the company entered an arrangement with its creditors (a "CVA") in 2012. In January 2014 Shire made the last of the payments due under the CVA, which means that it is no longer subject to a company voluntary arrangement. This is another milestone in the company's track back to normal trading.
The Shire team has done an outstanding job building on the work of last year, producing a very creditable financial performance. Quality of product has remained high and the Shire factory once again received the British Retail Consortium Grade A status in 2015.Competition between supermarket clients for customers remains intense, however, and this undoubtedly affects Shire. The company is responding with continued innovation and renewed determination to provide quality products at competitive prices on a sustainable basis.
Security solutions
Sira Defence & Security, the Group's digital CCTV viewing software business, had a much improved year with revenue increasing from 0.18 million to 0.25 million and achieving profits of 0.08 million (2013: breakeven).The level of activity in SDS's sector has continued into 2015 and we remain optimistic about SDS's on-going contribution to the Group.
Recent developments
On 25 March 2015, we announced the acquisition of Impetus Automotive Limited ("IAL"). IAL's principal activity is the provision of consulting services to the automotive sector, including vehicle manufacturers, dealerships and national sales companies. The company, which has UK offices in Warwick and Cranfield, employs approximately 200 people serving clients in the UK and a number of other international markets. Further information on the IAL's activities can be found at www.impetusautomotive.com.
Volvere, through a wholly-owned subsidiary, settled certain debt obligations of IAL's parent company and acquired the entire share capital of IAL for a total cash consideration of 1.3 million, satisfied from Volvere's
existing cash resources. Volvere has also made working capital facilities available to IAL. It is expected that Volvere's shareholding in IAL will reduce through the issue of new equity to key stakeholders in due course.
IAL has been in the Group for approximately two months. We have spent most of that time engaging with the company's management, staff and clients to understand what we can do better and help IAL grow. Once again, I am grateful to everyone at IAL for their support during the inevitable uncertainty caused by a change of ownership.
Future strategy
There remain plenty of opportunities for us and I remain confident that we have the resources and skills to analyse and respond to them appropriately for the benefit of all our shareholders.
Jonathan Lander
Chief Executive
28 May 2015
Financial Review
Financial performance
Detailed information about the Group's segments is set out in note 5 to the preliminary announcement which should be read in conjunction with this financial review and the Chairman's and Chief Executive's statements.
Overview
Total revenue from continuing operations increased from 16.14 million to 24.15 million, reflecting growth in the Group's food manufacturing business, Shire Foods Limited, and the inclusion of a first full year of trading of the Group's transport planning & engineering business, JMP Consultants Limited.
Profit after tax from continuing operations (stated after a one-off share-based payment charge of 0.16 million and an exceptional credit of 0.85 million) was 1.65 million (2013: 0.51 million), the improvement in profits mainly being the result of continued growth and improved profitability at Shire Foods Limited.
Transport planning & engineering
The Group's transport planning & engineering segment consists of JMP Consultants Limited ("JMP") which was acquired in May 2013.Revenues for the year ended 31 December 2014 were 11.76 million compared with 7.41 million for the 7 months from the date of acquisition to the end of 2013.Profits for the year were 0.45 million stated after a share-based payment charge of 0.16 million, representing an underlying profit of 0.6 million (2013: 0.54 million (after adjustment for one off items related to the acquisition) for the period from acquisition to 31 December).
There was a share-based payment charge of 0.16 million (2013: nil) relating to the issue of equity to certain management and staff during the year.This has resulted in the Group's shareholding in JMP being reduced to 76%.
Food manufacturing
Shire Foods' financial performance improved significantly during the year with revenue in 2014 up by 42% to 12.13 million (2013: 8.53 million).The growth reflects the effects of new customer contracts, which had been won but where supply only commenced in the second quarter of the year.The continuing focus on quality with efficiency is now beginning to show through improved profitability with Shire achieving profits (before intra-group interest) of 1.65 million (including exceptional income of 0.85 million), compared to 0.1 million in 2013.
Exceptional income consists of the release of certain liabilities which are no longer payable in accordance with the terms of a Company Voluntary Agreement ("CVA") which Shire entered into in 2011.The CVA has now ended and Shire's net assets have increased by 0.85 million as a result.
Security solutions
Sira Defence & Security achieved revenue growth in 2014 with revenues up from 0.18 million to 0.25 million.Costs remained tightly controlled resulting in the achievement of a modest profit of 0.08 million, following a break-even result last year.The adoption of SiraView, the CCTV viewing software, by the police, has continued to be encouraging.We are forging relationships with the wider supply chain to ensure SiraView's 'gateway' to accessing, viewing and managing video footage remains a robust customer proposition.
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 and has continued with active treasury management in response to prevailing low interest rates.This strategy achieved investment revenues, other gains and losses and net finance income totalling 0.10 million (2013: 0.46 million).
Exceptional items
The consolidated income statement includes exceptional income of 0.85 million as explained above and in note 16.
Statement of financial position
Cash and cash equivalents
Cash at the year end totalled 12.22 million (2013: 11.28 million).As noted below, the Group made purchases during the year of its own shares for treasury for a total consideration of 0.31 million (2013: 1.62 million).
Available for sale investments
At the year end the Group's available for sale investments had a market value of 0.92 million (2013: 0.96 million); the base cost of these investments was 0.6 million (2013: 0.7 million).
In line with the Group's treasury management policies and pending investment in other acquisitions, the Group continues to seek short term investments where there is the opportunity for attractive returns.
Dividends
In accordance with the policy set out at the time of admission to AIM, the Board does not currently intend to recommend payment of a dividend and prefers to retain profits as they arise for investment in future opportunities, or to purchase own shares for treasury where that is considered to be in the best interests of shareholders.
Purchase of own shares
The Group purchased for treasury a total of 114,000 shares (2013: 559,028 shares) for total consideration of 307,000 (2013: 1,616,000) representing an average price of 2.69 per share (2013: 2.89 per share). As of 31 December 2014, the Group's share repurchases total 5.75 million.
Earnings per share
Basic and diluted earnings per ordinary share were 25.60p (2013: basic 15.14p, diluted 15.11p).
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 and disclosed in note 5.
Internally, management uses a variety of non-financial KPIs as follows: in respect of the food manufacturing sector order intake, manufacturing output and sales are monitored weekly and reported monthly; in the transport planning & engineering segment staff utilisation, amounts billed to clients and cash collected are closely monitored; order intake is monitored weekly and reported monthly in respect of the security solutions segment.
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 services that are dependent on the continued employment of the Group's employees and availability of suitable, profitable workload. Also, 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.
These risks are managed by the Board in conjunction with the management of the Group's businesses.
More information on the Group's financial risks is disclosed in note 17.
Directors' interests
The Directors' interests in the share capital of the Company at 31 December are disclosed below:
Number of
Ordinary
Shares
31 December
2014
Number of
Ordinary
Shares
31 December
2013
David Buchler
129,893
129,893
Jonathan Lander
1,023,677
1,023,677
Nick Lander
548,277
548,277
No director held any share options at 31 December 2014 (2013: David Buchler held 31,000 options).
No changes in directors' shareholdings (or options) occurred between 31 December and the date of this announcement.
Nick Lander
Chief Financial & Operating Officer
28 May 2015
Consolidated income statement
Note
2014
2013
'000
'000
Continuing operations
Revenue
5
24,148
16,137
Cost of sales
(16,418)
(11,497)
Gross profit
7,730
4,640
Distribution costs
(713)
(523)
Administrative expenses:
- Before gain on bargain acquisition and share based payments
(6,164)
(4,486)
- Gain on bargain acquisition
- Share based payments
22
24
-
(158)
417
-
Administrative expenses
(6,322)
(4,069)
Operating profit
2
695
48
Investment revenues
7
65
261
Other gains and losses
7
142
304
Finance expense
7
(156)
(139)
Finance income
7
50
34
Exceptional items
16
852
-
Profit before tax
1,648
508
Income tax expense
8
-
-
Profit for the year from continuing operations
1,648
508
Discontinued operations
(Loss)/profit for the year from discontinued operations after tax
6
(177)
203
Profit for the year
1,471
711
Attributable to:
- Equity holders of the parent
1,069
689
- Non-controlling interests
402
22
1,471
711
Earnings/(loss) per share
9
Continuing operations
- Basic
29.84p
10.68p
- Diluted
29.84p
10.66p
Discontinued operations
- Basic
(4.24)p
4.46p
- Diluted
(4.24)p
4.45p
Total
- Basic
25.60p
15.14p
- Diluted
25.60p
15.11p
Consolidated statement of comprehensive income
2014
2013
'000
'000
Profit for the year
1,471
711
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)
- reclassified to profit and loss
89
(34)
(27)
-
Other comprehensive income
55
(27)
Total comprehensive income for the year
1,526
684
Attributable to:
- Equity holders of the parent
1,124
662
- Non-controlling interests
402
22
1,526
684
Consolidated statement of changes in equity
2013
Share
capital
'000
Share
premium
'000
Revaluation reserve
'000
Retained
earnings
'000
Total
'000
Non-controlling interests
'000Total
'000
Other comprehensive income
-
-
(27)
-
(27)
-
(27)
Profit for the year-
689
689
22
711
Total comprehensive income for the year
-
-
(27)
689
662
22
684
Balance at 1 January50
3,636
284
14,021
17,991
1,477
19,468
Transactions with owners:
Dividends paid to non-controlling interest
-
-
-
-
-
(120)
(120)
Issue of shares
-
4
-
-
4
-
4
Purchase of own shares
-
-
-
(1,616)
(1,616)
-
(1,616)
Disposal of discontinued operations
-
-
-
-
-
(837)
(837)
Total transactions with owners
-
4
-
(1,616)
(1,612)
(957)
(2,569)
Balance at 31 December
50
3,640
257
13,094
17,041
542
17,583
2014
Other comprehensive income
-
-
89
-
89
-
89
Transfer to profit and loss on disposal
-
-
(34)
-
(34)
-
(34)
Profit for the year-
-
-
1,069
1,069
402
1,471
Total comprehensive income for the year
-
-
55
1,069
1,124
402
1,526
Balance at 1 January50
3,640
257
13,094
17,041
542
17,583
Transactions with owners:
Increase in non-controlling interest
-
-
-
-
-
197
197
Purchase of own shares
-
-
-
(307)
(307)
-
(307)
Total transactions with owners
-
-
-
(307)
(307)
197
(110)
Balance at 31 December
50
3,640
312
13,856
17,858
1,141
18,999
Consolidated statement of financial position
2014
2013
Note
'000
'000
Assets
Non-current assets
Goodwill
11
-
-
Other intangible assets
11
-
-
Property, plant and equipment
12
5,361
5,531
Deferred tax asset
19
-
-
Total non-current assets
5,361
5,531
Current assets
Inventories
13
937
688
Trade and other receivables
15
6,610
4,823
Cash and cash equivalents
12,215
11,280
Available for sale investments
14
921
955
Total current assets
20,683
17,746
Total assets
26,044
23,277
Liabilities
Current liabilities
Loans and other borrowings
18
(1,999)
(817)
Finance leases
18
(159)
(121)
Trade and other payables
16
(4,066)
(2,893)
Total current liabilities
(6,224)
(3,831)
Non-current liabilities
Loans and other borrowings
18
(821)
(946)
Finance leases
18
-
(57)
Trade and other payables
16
-
(860)
Total non-current liabilities
(821)
(1,863)
Total liabilities
(7,045)
(5,694)
Net assets
18,999
17,583
Equity
Share capital
20
50
50
Share premium account
21
3,640
3,640
Revaluation reserve
21
312
257
Retained earnings
13,856
13,094
Capital and reserves attributable to equity holders of the Company
17,858
17,041
Non-controlling interests
27
1,141
542
Total equity
18,999
17,583
Consolidated statement of cash flows
2014
2014
2013
2013
Note
'000
'000
'000
'000
Profit for the year from continuing operations
1,648
508
Adjustments for:
Investment revenues
7
(65)
(261)
Other gains and losses
7
(142)
(304)
Finance expense
7
156
139
Finance income
7
(50)
(34)
Depreciation
12
416
344
Amortisation/impairment of intangible assets
11
-
429
Gain on bargain acquisition
22
-
(417)
Share based payments
24
158
-
473
(104)
Operating cash flows before movements in working capital
2,121
404
Increase in trade and other receivables
(1,787)
(1,858)
Increase in trade and other payables
418
1,157
Increase in inventories
(249)
(317)
Cash generated from/(used by) continuing operations
503
(614)
Net cash used by discontinued operations
(177)
(335)
Net cash generated from/(used by) operations
326
(949)
Investing activities
Proceeds from sale of discontinued operations net of cash sold
6
-
769
Acquisition of business
22
-
(415)
Purchase of available for sale investments
(3,732)
(11,631)
Income from available for sale investments
65
261
Disposal of available for sale investments
3,997
11,934
Purchase of property, plant and equipment
12
(245)
(333)
Interest received
7
50
34
Net cash generated from investing activities
135
619
Financing activities
Interest paid
(156)
(139)
Purchase of own shares (treasury shares)
20
(307)
(1,616)
Net increase in/(repayment of) borrowings
937
(149)
Dividend paid to non-controlling interest
-
(120)
Issue of shares
-
4
Net cash generated from/(used by) financing activities
474
(2,020)
Net increase/(decrease) in cash and cash equivalents
935
(2,350)
Cash and cash equivalents at beginning of year
11,280
13,630
Cash and cash equivalents at end of year
12,215
11,280
Notes forming part of the preliminary announcement
The financial information set out above, which was approved by the Board on 28 May 2015, is derived from the full Group accounts for the year ended 31 December 2014 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 2014, 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 2015 and will be available from the Company's registered office, Abacus House, 33 Gutter Lane, London, EC2V 8AS and website 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 17 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 operates in a number of different market sectors. 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 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.
Business combinationsThe 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 (ie 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.
Other intangible assets
All other intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, which are considered finite. Residual values and useful lives are reviewed at each reporting date and they are subject to impairment testing where indicators of impairment are present. Registered design rights are amortised over the life of the registration.
When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.
Sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership, generally when the customer has taken undisputed delivery of the goods. There are no service obligations attached to the sale of goods.
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.
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, Europe and the USA.
Financial information (including revenue and operating profits) 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. 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
Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between finance charges and the reduction of lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.
Foreign currencies
Transactions in currencies other than pounds 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.
TaxationThe 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. 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 - 20%-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 tangible 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.
In determining the Group's share-based payment charge arising in respect of the shares issued to non-controlling interests (as set out in note 24), the Group has evaluated the enterprise value of JMP. This evaluation has considered the range of possible earnings multiples that could apply on an exit to a business such as JMP, the rights attaching to the shares issued, the proportion of the resulting equity participation and the existence of a single large shareholder with significant influence.
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
The Group classifies its financial assets into one of the following categories, depending on the purpose for which the asset was acquired. The Group's accounting policy for each category is as follows:
Fair value through profit or loss (FVTPL): This category comprises only in-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. The Group does not have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through profit or loss.
Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method less any provision for impairment. Receivables are considered for impairment when there is a risk of counterparty default.
Available-for-sale: Non-derivative financial assets not included in the above categories are classified as available-for-sale and comprise the Group's investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. They are carried at fair value with changes in fair value recognised directly in equity (other comprehensive income). Fair value is determined by reference to independent valuation statements provided by the investment manager or broker (as the case may be) through whom such investments are made. Where the underlying investments are exchange-traded, the mid-price of the investment is used.
Impairment: All financial assets except those at FVTPL are reviewed for impairment at each reporting date to identify whether there is any objective evidence that a financial asset or group of assets is impaired. Different methods are used to determine impairment as described above.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. The Group's accounting policy for each category is as follows:
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
The judgements that have a significant impact on the carrying value of assets and liabilities are discussed below:
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.
Current asset investments
Declines in the fair value of current asset investments are considered for indicators of impairment. Where the decline in value is significant or prolonged the asset may be considered to be impaired with the resulting impairment losses recognised in the income statement. Short term and insignificant declines in fair value that are considered to be temporary are reflected in other comprehensive income.
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.
Revenue recognition
Due to the nature of some services provided by certain of the Group's businesses the recoverability of receivables can be subject to management estimates. Whilst the Group has a thorough process for reviewing the requirement for receivables and credit note provisions, this area is inherently subjective.
Useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical obsolescence that may change the utility of certain equipment used in the production of food.
Inventories
Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date. The future realisation of these inventories may be affected by market-driven changes that may reduce future selling prices.
Consolidation
Management have concluded that is not appropriate to utilise the exemption from consolidation available to investment entities under IFRS10. Accordingly the consolidation includes all entities which the Company controls.
Business combinations
Management uses valuation techniques in determining the fair values of the various elements of a business combination (see note 22).
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 standards and interpretations - in issue but not yet effective
At the date of authorisation of these financial statements, certain new standards, and amendments to existing standards have been published by the IASB that are not yet effective, and have not been adopted early by the Group. Information on those expected to be relevant to the Group's financial statements is provided below.
Management anticipates that all relevant pronouncements will be adopted in the Group's accounting policies for the first period beginning after the effective date of the pronouncement. New standards, interpretations and amendments not either adopted or listed below are not expected to have a material impact on the Group's financial statements.
IFRS 9 'Financial Instruments' (2014)
The IASB recently released IFRS 9 'Financial Instruments' (2014), representing the completion of its project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. The new standard introduces extensive changes to IAS 39's guidance on the classification and measurement of financial assets and introduces a new 'expected credit loss' model for the impairment of financial assets. IFRS 9 also provides new guidance on the application of hedge accounting.
The Group's management have yet to assess the impact of IFRS 9 on these consolidated financial statements. The new standard is required to be applied for annual reporting periods beginning on or after 1 January 2018.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 presents new requirements for the recognition of revenue, replacing IAS 18 'Revenue', IAS 11 'Construction Contracts', and several revenue-related Interpretations. The new standard establishes a control-based revenue recognition model and provides additional guidance in many areas not covered in detail under existing IFRSs, including how to account for arrangements with multiple performance obligations, variable pricing, customer refund rights, supplier repurchase options, and other common complexities.
IFRS 15 is effective for reporting periods beginning on or after 1 January 2017. The Group's management have not yet assessed the impact of IFRS 15 on these consolidated financial statements.
2 Operating profit
Operating profit is stated after charging/(crediting):
2014'000
2013
'000
Staff costs
9,091
5,773
Depreciation of property, plant and equipment:
- owned assets
394
321
- leased assets
22
23
Amortisation and impairment of intangible assets
Gain on bargain acquisition
-
-
429
(417)
Operating lease expense
177
436
Audit fees
50
48
The analysis of audit fees is as follows:
- for the audit of the Company's annual accounts
15
12
- for the audit of the Company's subsidiaries' accounts
35
36
50
48
3 Staff costs
Staff costs comprise:
2014'000
2013'000
Wages and salaries
7,955
5,096
Employer's National Insurance contributions
767
467
Defined contribution pension cost
369
210
9,091
5,773
The average number of employees (including Directors) in the Group was as follows:
2014
Number
2013
Number
Engineering and production
220
193
Sales and marketing
9
9
Administration and management
31
30
260
232
4 Directors' remuneration
The remuneration of the directors was as follows:
Salaries & fees
2014
'000
Bonus
2014
'000
Other benefits
2014
'000
Total
2014
'000
David Buchler
30
-
-
30
Jonathan Lander
11
-
-
11
Nick Lander
11
-
1
12
52
-
1
53
Salaries & fees
2013
'000
Bonus
2013
'000
Other benefits
2013
'000
Total
2013
'000
David Buchler
30
-
-
30
Jonathan Lander
11
-
-
11
Nick Lander
11
-
1
12
52
-
1
53
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 551,000 (2013: 396,000). The amount paid to David Buchler in the year was paid to a third party on an invoice basis. None of the directors were members of the Group's defined contribution pension plan in the year (2013: none).
5 Operating segments
Analysis by business segment:
Transport planning and engineering
2014
'000
Security solutions
2014
'000
Investing and management services
2014
'000
Food manufacturing
2014
'000
Total continuing
2014
'000
Discontinued
2014
'000
Total
2014
'000
Revenue
11,761
253
-
12,134
24,148
-
24,148
Profit/(loss) before tax*
450
81
(534)
1,651
1,648
(177)
1,471
Transport planning and
engineering
2013
'000
Security solutions
2013
'000
Investing and management services
2013
'000
Food manufacturing
2013
'000
Total continuing
2013
'000
Discontinued
2013
'000
Total
2013
'000
Revenue
7,413
176
17
8,531
16,137
7,252
23,389
Profit/(loss) before tax*
1,114
1
(724)
117
508
203
711
*stated before intra-group management and interest charges
Transport planning and engineering
2014
'000
Security solutions
2014
'000
Investing and management services
2014
'000
Food manufacturing
2014
'000
Total continuing
2014
'000
Discontinued
2014
'000
Total
2014
'000
Assets
4,526
33
11,932
9,553
26,044
-
26,044
Liabilities
(2,817)
(166)
(256)
(3,806)
(7,045)
-
(7,045)
Net assets
1,709
(133)
11,676
5,747
18,999
-
18,999
Transport planning and engineering
2013
'000
Security solutions
2013
'000
Investing and management services
2013
'000
Food manufacturing
2013
'000
Total continuing
2013
'000
Discontinued
2013
'000
Total
2013
'000
Assets
3,378
80
11,562
8,257
23,277
-
23,277
Liabilities
(1,791)
(105)
(295)
(3,503)
(5,694)
-
(5,694)
Net assets
1,587
(25)
11,267
4,754
17,583
-
17,583
Transport planning and engineering
2014
'000
Security solutions
2014
'000
Investing and management services
2014
'000
Food manufacturing
2014
'000
Total continuing
2014
'000
Discontinued
2014
'000
Total
2014
'000
Capital spend
163
-
-
82
245
-
245
Depreciation
82
1
7
326
416
-
416
Amortisation/
impairment
-
-
-
-
-
-
-
Transport planning and engineering
2013
'000
Security solutions
2013
'000
Investing and management services
2013
'000
Food manufacturing
2013
'000
Total continuing
2013
'000
Discontinued
2013
'000
Total
2013
'000
Capital spend
167
1
2
96
266
67
333
Depreciation
18
2
4
320
344
107
451
Amortisation/
impairment
-
-
-
429
429
-
429
Geographical analysis:
External revenue by location of customers
Non-current assets (excluding deferred tax) by location of assets
2014
2013
2014
2013
'000
'000
'000
'000
UK
22,795
15,226
5,361
5,531
Rest of Europe
478
399
-
-
Other
875
512
-
-
24,148
16,137
5,361
5,531
The Group had 3 customers that individually accounted for in excess of 10% of the Group's revenues as follows:
2014
2013
'000
'000
First customer
3,210
3,109
Second customer
2,775
1,910
Third customer
2,659
-
6 Discontinued operations
The Group's stake in Interactive Prospect Targeting Limited (IPT) was sold on 13 December 2013 for cash consideration amounting to 900,000. In accordance with IFRS 5 the total profits relating to discontinued activities for the year ended 31 December 2013 are presented on a single line on the income statement, and are analysed below. Discontinued operations in 2014 comprise further costs incurred during 2014 in respect of the disposal of IPT.
2014
'000
2013
'000
Revenue
-
7,252
Cost of sales
-
(3,486)
Administrative expenses
(177)
(4,325)
Loss before tax
Finance income
Income tax expense
(177)
-
-
(559)
-(850)
Loss for the year
(177)
(1,409)
Non-controlling interests' share of losses in period to disposal-
767Group share of losses
Profit on disposal (see below)
(177)
-
(642)
845
(Loss)/profit from discontinued operations
(177)
203
At the date of disposal the carrying amount of IPTs net assets were as follows:
2013
'000
Goodwill
305
Property plant and equipment
98
Receivables
1,032
Cash and cash equivalents
131
Payables (current)
(1,445)
Net assets
121
Non-controlling interests' share of net assets
(66)
Group share of net assets
Profit on disposal
55
845
Consideration
900
7 Investment revenues, other gains and losses and finance income and expense
2014
2013
'000
'000
Investment revenues
65
261
Other gains and losses
142
304
Finance income
Bank interest receivable
50
34
Finance expense
Bank interest
(64)
(70)
Finance lease interest
(15)
(18)
Other interest and finance charges
(77)
(51)
(156)
(139)
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
2014
2013
'000
'000
Current tax expense
-
-
Deferred tax expense recognised in income statement
-
-
Total tax expense recognised in income statement
-
-
Tax recognised directly in equity
-
-
Total tax recognised (continuing operations)
-
-
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:
2014
'000
2013
'000
Profit before tax
1,471
508
Expected tax charge based on the prevailing rate of corporation tax in the UK of 21.49% (2013: 23.25%)
316
118
Effects of:
Expenses not deductible for tax purposes75
9
Discontinued activities
-
47
Income/gains not subject to tax
(197)
(342)
Depreciation for period (less than)/in excess of capital allowances
(16)
43
Short term timing differences
Losses not utilised
12
4
-
118
Utilisation of previously unrecognised losses
(194)
-
Other differences
-
7
Total tax recognised
-
-
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:
2014
'000
2013
'000
From continuing operations
From discontinued operations
1,246
(177)
486
203
Total
1,069
689
EEa
Weighted average number of shares for the purposes of earnings per share:
2014
No.
2013
No.
Weighted average number of ordinary shares in issue
4,175,676
4,548,805
Dilutive effect of potential ordinary shares
-
9,899
Weighted average number of ordinary shares for diluted EPS
4,175,676
4,558,704
10 Subsidiaries
The principal subsidiaries of Volvere plc, all of which have been included in these consolidated financial statements, are as follows:
Name
Country of
Incorporation
Proportion of ownership interest
Volvere Central Services Limited
England and Wales
100%
NMT Group Limited
Scotland
98.6%
Sira Defence & Security Limited
Shire Foods Limited
England and Wales
England and Wales
100%
80%
JMP Consultants Limited
England and Wales
76%
11 Goodwill and other intangible assets
Goodwill
'000
Registered designs
'000
Total
'000
Cost
At 1 January 2013
305
441
746
Disposed in the year
(305)
-
(305)
At 31 December 2013
-
441
441
At 31 December 2014
-
441
441
Amortisation and impairment charges
At 1 January 2013
-
12
12
Amortisation charge for the year
-
24
24
Impairment
-
405
405
At 31 December 2013
-
441
441
At 31 December 2014
-
441
441
Net book value
At 31 December 2014
-
-
-
At 31 December 2013
-
-
-
Goodwill represented that arising from the acquisition of Interactive Prospect Targeting Limited's business and assets on 29 September 2008, being the difference between the fair value of the consideration paid and the fair value of the net assets acquired. IPT was sold on 13 December 2013.
In 2013, a review of the benefits accruing from products relating the registered design rights resulted in an impairment charge in the year and a corresponding reduction in their carrying value in the statement of financial position.
12 Property, plant and equipment
Short Leasehold
Property
'000
Freehold Property
'000
Plant & Machinery
'000
Total
'000
Cost
At 1 January 2013
9
2,430
4,719
7,158
Additions
76
-
167
243
Acquired through business combinations
-
-
21
21
Disposed with discontinued operations
-
-
(1,261)
(1,261)
At 31 December 2013 and 1 January 2014
85
2,430
3,646
6,161
Additions
54
-
191
245
Disposals
(9)
-
(8)
(17)
At 31 December 2014
130
2,430
3,829
6,389
Accumulated depreciation
At 1 January 2013
4
31
1,370
1,405
Disposed with discontinued operations
-
-
(1,119)
(1,119)
Charge for the year
7
22
315
344
At 31 December 2013 and 1 January 2014
Disposals
11
(9)
53
-
566
(9)
630
(18)
Charge for the year
24
22
370
416
At 31 December 2014
26
75
927
1,028
Net book value
At 31 December 2014
104
2,355
2,902
5,361
At 31 December 2013
74
2,377
3,080
5,531
The net book value of property, plant and equipment held on finance leases was 501,000 (2013: 882,000).
13 Inventories
2014
'000
2013
'000
Raw materials
Finished products
378
559
266
422
937
688
14 Financial assets (current)
2014
'000
2013
'000
Available-for-sale investments
921
955
During the year the Group invested in a mixture of equity funds and sub-investment grade securities of a UK banks. At the year end the cost of these investments was 603,000 (2013: 692,000).
15 Trade and other receivables
2014
'000
2013
'000
Trade receivables
5,151
3,366
Less: provision for impairment of trade receivables
(75)
(23)
Net trade receivables
5,076
3,343
Other receivables
119
195
Amounts recoverable on contracts
1,078
1,022
Prepayments and accrued income
337
263
6,610
4,823
The fair value of trade receivables approximates to carrying value at 31 December 2014 and 2013.
The Group is exposed to credit risk with respect to trade receivables due from its customers, primarily in the transport planning & engineering 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, particularly in the food manufacturing segment. 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:
2014
'000
2013
'000
Up to 3 months
5,057
3,177
3 to 6 months
64
178
6 to 12 months
27
11
Over 12 months
3
-
5,151
3,366
16 Trade and other payables
2014
'000
2013
'000
Current:
Trade payables
997
813
Other tax and social security
755
671
Other payables
655
473
Accruals
1,169
721
Deferred income
490
215
4,066
2,893
Non-current: Trade and other payables subject to CVA (see below)
-
860
One of the Group's subsidiaries, Shire Foods Limited ("Shire"), entered into a company voluntary arrangement ("CVA") in January 2012. Under the terms of the CVA Shire were to pay 350,000 over a maximum 3 year period in satisfaction of unsecured liabilities of approximately 1,200,000.
During 2014 Shire made the final payments due under the CVA and, in so doing, was released from all remaining liabilities that were subject to the CVA. The balances released totalled 852,000 and the associated credit is shown separately in the income statement, under the caption "exceptional income".
The fair value of all other trade and other payables approximates to book value at 31 December 2014.
17 Financial instruments - risk management
The Group's principal financial instruments are:
Trade receivables
Cash at bank
Current asset investments
Loans and finance leases
Trade and other payables
The Group is exposed through its operations to one or more of 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, the Group's investments had the following interest profiles which contained no variable rates:
2014
'000
2013
'000
No interest
-
-
Fixed interest
921
955
921
955
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; they are of the opinion that as the Group's trading exposure is limited to transactions with a small number of customers and suppliers it is not appropriate to actively hedge that element of its foreign currency exposure, nor is its exposure to foreign currency risk considered to be 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 15.
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. Investments have been held in 2014 in a mixture of equity funds and sub-investment grade securities of a UK bank, which have been made having regard to the Group's need to access capital. Market price movements of these investments could materially affect the value of the Group's assets. The directors believe that the exposure to market price risk from this activity is acceptable in the Group's circumstances.
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, revaluation 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:
2014
'000
2013
'000
Total debt
2,979
1,941
Less cash and cash equivalents
(12,215)
(11,280)
Net debt/(funds)
(9,236)
(9,339)
Total equity (capital)
18,999
17,583
Net debt/(funds) to capital ratio
(48.6)%
(53.1)%
18 Financial assets and liabilities - numerical disclosures
Analysis of financial assets by category:
2014
'000
2013
'000
Available for sale investments
921
955
Loans and receivables
Cash and cash equivalents
6,273
12,215
3,538
11,280
Total financial assets
19,409
15,773
Fair values
The Directors consider the carrying values of all financial assets and liabilities to be a reasonable approximation of their fair values. Investments held at fair value are all listed on a recognised market and hence their valuation is not subject to significant judgement or uncertainty. Such investments are therefore considered to fall under Level 1 in the IFRS 7 fair value hierarchy.
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 15 above) are as follows:
2014
'000
2013
'000
Sterling
No fixed maturity
921
955
Maturity of financial liabilities
The maturity of borrowings (including finance leases) carried at amortised cost is as follows:
2014
'000
2013
'000
Less than six months2,072
819
Six months to one year
One to two years
Two to five years
More than five years
85
103
164
555
119
175
204
624
2,979
1,941
The above borrowings are analysed on the balance sheet as follows:
Loans and other borrowings (current)
Finance leases (current)Loans and other borrowings (non-current)
Finance leases (non-current)
1,999
159
821
-
817
121
946
57
2,979
1,941
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.
The maturity of other financial liabilities, excluding loans and borrowings, carried at amortised cost is as follows:
2014
'000
2013
'000
Less than six months
Six months to one year
One to two years
2,407
-
-
1,957
-
860
2,407
2,817
19 Deferred tax
Movements in deferred tax assets are outlined below:
Accelerated tax depreciation
Other timing differences
Losses
Total
'000
'000
'000
'000
At 1 January 2013
58
20
773
851
Derecognised on disposal of discontinued operations in 2013
(58)
(20)
(773)
(851)
At 31 December 2013 and 31 December 2014
-
-
-
-
In addition, there are unrecognised net deferred tax assets as follows:
2014
'000
2013
'000
Tax losses carried forward
600
1,179
Excess of depreciation over capital allowances
7
(321)
Short term temporary differences
11
22
Net unrecognised deferred tax asset
618
880
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 element of the deferred tax assets have not been recognised because there is insufficient evidence that they will be recovered.
20 Share capital
Authorised
2014
Number
2014
'000
2013
Number
2013
'000
Ordinary shares of 0.0000001 each
100,100,000
-
100,100,000
-
A shares of 0.49999995 each
50,000
25
50,000
25
B shares of 0.49999995 each
50,000
25
50,000
25
Deferred shares of 0.00000001 each
4,999,999,500,000
50
4,999,999,500,000
50
100
100
Issued and fully paid
2014
Number
2014
'000
2013
Number
2013
'000
Ordinary shares of 0.0000001 each
6,207,074
-
6,207,074
-
Deferred shares of 0.00000001 each
4,999,994,534,696
50
4,999,994,534,696
50
50
50
Shares issued in the year
No shares were issued in the current year.
During 2013, the last remaining 455 A shares and 455 B shares were converted to 3,708 ordinary shares and 45,499,958,388 deferred shares, in accordance with the right attaching to the A and B shares.
In addition, 3,000 ordinary shares were issued for cash consideration of 4,125 on exercise of share options.
Treasury shares
During the year the Company acquired 114,000 (2013: 559,028) of its own Ordinary shares for total consideration of 307,000 (2013: 1,616,000). This brings the total number of Ordinary shares held in treasury to 2,121,116 (2013: 1,947,116) with an aggregate nominal value of less than 1.
Rights attaching to deferred shares
The Deferred shares carry no rights to participate in the profits or assets of the Company and carry no voting rights.
21 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 reserve
Cumulative net unrealised gains and losses arising on the revaluation of the Group's available for sale investments
Retained earnings
Cumulative net gains and losses recognised in the consolidated income statement
22 Business combinations (2013)
The Group acquired the business and certain assets of JMP Consultants Limited (a transport planning and consultancy business) on 15 May 2013 for total cash consideration of 415,000. The fair values of assets and liabilities acquired, and resulting gain on bargain acquisition (credited to the income statement), are set out below:
Book value
'000
Fair value adjustments
'000
Fair values
'000
Property, plant and equipment
28
(7)
21
Trade and other receivables
Trade and other payables
1,191
(638)
386
(128)
1,577
(766)
Net assets acquired
581
251
832
Gain on bargain acquisition
(417)
Consideration (settled in cash)
415
A gain on bargain acquisition arose because the business was in financial distress at the time of the acquisition and because of limited visibility of its financial performance. As the acquisition was of a business and not of a separate legal entity it is not possible to reliably disclose the results of the acquired business in the period before the acquisition. The results of the acquired business after the acquisition form the results of the transport planning and engineering segment as disclosed in note 5.
23 Leases
Operating leases - lessee
The Group leases most of its properties. The terms of property leases vary, although they all tend to be tenant repairing with rent reviews every 2 to 5 years; some have break clauses. The total future values of minimum lease payments are due as follows:
Land and buildings
2014
'000
Other
2014
'000
Land and buildings
2013
'000
Other
2013
'000
Not later than one year
127
-
66
-
Later than one year and not later than five years
670
-
699
-
Later than five years
14
-
-
-
811
-
765
-
24 Share-based payments
The Company has operated two share-based payment schemes, an approved EMI equity-settled share-based remuneration scheme for certain employees and an unapproved equity-settled share scheme for certain management. Under the EMI scheme, the options vested on achievement of employee-specific targets subject to a compulsory 2.5 or 3 year vesting period and can be exercised for a further 7.5 or 7 years after vesting. All options issued have now either lapsed or been exercised, such that there are no options in issue as at 31 December 2014 (2013: 31,000).
Options in issue during the year are summarised below:
Weighted average exercise price
2014
Number
2014
Weighted average exercise price
2013
Number
2013
Outstanding at beginning of the year
187.5p
31,000
183.1p
34,000
Granted during the year
-
-
-
-
Exercised during the year
-
-
137.5p
(3,000)
Lapsed during the year
(187.5)p
(31,000)
-
-
Outstanding at the end of the year
N/A
-
187.5p
31,000
All options in issue were fully vested prior to 1 January 2013, hence there is no share based payment charge in 2014 or 2013, in respect of share options.
The share based payment charge of 158,000 in the income statement for 2014 is in respect of shares issued in JMP Consultants Limited to certain management of that business. In determining the Group's share-based payment charge arising in respect of the shares issued to non-controlling interests (as set out in note 24), the Group has evaluated the enterprise value of JMP. This evaluation has considered the range of possible earnings multiples that could apply on an exit to a business such as JMP, the rights attaching to the shares issued, the proportion of the resulting equity participation and the existence of a single large shareholder with significant influence.
25 Related party transactions
Details of amounts payable to Directors are disclosed in note 4. Other than their remuneration and participation in the Group's share option schemes (note 24), there are no transactions with key members of management.
There were no other material transactions with related parties.
26 Contingent liabilities
The Group had no material contingent liabilities as at the date of these financial statements.
27 Non-controlling interests
The non-controlling interests of 1,141,000 (2013: 542,000 ) relate to the net assets attributable to the shares not held by the Group at 31 December 2014 in the following subsidiary undertakings:
Name of subsidiary undertaking
2014
'000
2013
'000
NMT Group Limited
75
76
JMP Consultants Limited
271
-
Shire Foods Limited
795
466
1,141
542
Summarised financial information (before intra-group eliminations) in respect of those subsidiaries with material non-controlling interests is presented below. Comparative figures for JMP Consultants Limited are not disclosed as there was no non-controlling interest at any point during 2013.
JMP Consultants Limited
Shire Foods Limited
2014
'000
2014
'000
2013
'000
Property, plant and equipment
Current assets
Non-current liabilities
Current liabilities
231
4,295
-
(3,444)
5,129
4,424
(822)
(4,748)
5,373
2,884
(1,864)
(4,061)
Net assets (equity)
1,082
3,983
2,332
Attributable to:
Group
Non-controlling interests
811
271
3,188
795
1,866
466
1,082
3,983
2,332
Revenue 11,761 12,133 8,531 Profit for the year (stated after intra-group management and interest charges) 293 1,651 117 Profit for the year attributable to non-controlling interests 73 330 2328 Events after the balance sheet date
On 25 March 2015, the Group announced the acquisition of Impetus Automotive Limited ("IAL"). IAL's principal activity is the provision of consulting services to the automotive sector, including vehicle manufacturers, dealerships and national sales companies. The company, which has UK offices in Warwick and Cranfield, employs approximately 200 people serving clients in the UK and a number of other international markets. Further information on the IAL's activities can be found at www.impetusautomotive.com.
Volvere, through a wholly-owned subsidiary, settled certain debt obligations of IAL's parent company and acquired the entire share capital of IAL for a total cash consideration of 1.26 million, satisfied from Volvere's
existing cash resources. It is expected that Volvere's shareholding in IAL will reduce through the issue of new equity to key stakeholders in due course.
Volvere has made working capital facilities available to IAL. For the 10 month period ended 31 January 2015, IAL's unaudited net revenue was 9.7 million with an adjusted loss before tax of 0.1 million. For the 12 month period ended 31 March 2014, being the period representing the last audited annual financial information, IAL reported 15.6 million of revenue and profit before tax of 1.5 million. The reported profit figure excludes any allocation of certain central overhead costs which were previously borne by IAL's parent company.
The provisional fair values of the net assets acquired are as follows:
Book value
'000
Fair value adjustments
'000
Fair values
'000
Property, plant and equipment
182
-
182
Trade and other receivables
Trade and other payables (Note (a))
2,590
(1,702)
-
-
2,590
(1,702)
Net assets acquired
1,070
-
1,070
Goodwill
190
Consideration (settled in cash)
1,260
Note (a): the creditors of IAL noted above do not include debt obligations held in another Impetus group company, which Volvere settled as part of the acquisition.The consideration of 1.26 million includes a debt settlement of 1.06 million.
-ENDS-
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