REG - Volvere PLC - Final Results
25/05/2022 08:31
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RNS Number : 6849M Volvere PLC 25 May 2022
Volvere plc
("Volvere" or the "Company" and, together with its subsidiaries, the "Group")
Final results for the year ended 31 December 2021
Volvere plc (AIM: VLE), the growth and turnaround investment company,
announces its final results for the year ended 31 December 2021.
Highlights
£ million except where stated
Six months ended
Year ended
30 June
31 December 31 December (unaudited)
2021 2020 2021
Group revenue 35.58 30.81 15.72
Group profit/(loss) before tax from continuing operations 0.07 (0.55) (0.29)
Group profit/(loss) for the period (including discontinued operations)
0.07 (0.52) (0.29)
As at 31 As at 31 As at
December 2021
December 2020
30 June 2021
Consolidated net assets per share
(excluding non-controlling interests)((1))
£13.49 £13.65 £13.50
Group net assets 37.05 37.18 36.89
Cash and marketable securities 21.87 23.71 23.13
· Solid performance by Shire Foods, the Group's savoury food
manufacturer with revenues increasing by approximately 12.6% to a new high of
£30.61 million (2020: £27.19 million) and a profit before tax, intra-group
interest and management charges((1)) of approximately £2.14 million (2020:
£1.81 million).
· Indulgence, the Group's premium frozen cakes and desserts
manufacturer, achieved revenues of £4.97 million, representing growth of
approximately 21% compared with the prior period on an annualised basis (2020:
period 7 February - 31 December 2020 £3.62 million). The loss before tax,
intra-group interest and management charges((1)) was approximately £1.01
million (2020: loss £1.02 million).
· Net assets per share((2)) of £13.49.
Note
1 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.
2 Based on the net assets attributable to
owners of the parent company and the respective period end shares in issue of
2,568,422, 2,571,922 and 1,834,182.
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation and the Directors of the Company are responsible for
the release of this announcement.
For further information:
Volvere plc
Jonathan Lander, CEO
Tel: +44 (0) 1926 335700
www.volvere.co.uk
Cairn Financial Advisers LLP (Nominated Adviser)
Sandy Jamieson/James Lewis
Tel: + 44 (0) 207 213 0880
Canaccord Genuity Limited (Joint Broker)
Tel: + 44 (0) 207 523 8000
Bobbie Hilliam/Alex Aylen/Georgina McCooke
Hobart Capital Markets LLP (Joint Broker)
Lee Richardson
Tel: + 44 (0) 207 070 5691
Notes to editors:
Volvere plc (AIM: VLE), is a growth and turnaround investment company. The
Group's current trading businesses are involved in food manufacturing. The
Group currently employs approximately 270 people.
For further information, please visit www.volvere.co.uk
(http://www.volvere.co.uk) .
Forward-looking statements:
This announcement 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.
Chairman's statement
I am pleased to report on the results for the year ended 31 December 2021.
The Group's performance in 2021 was satisfactory with Shire Foods delivering a
robust performance. The Group's net assets per share* fell slightly to £13.49
(2020: £13.65), principally because of the losses at Indulgence
Patisserie. Group revenue was £35.58 million (2020: £30.81 million) and
profit before tax was £0.07 million (2020: loss £0.55 million).
Whilst the wider inflationary environment remains a concern, we remain
cautiously optimistic about the prospects for the Group as a whole, not least
because of the number of potential acquisition opportunities that are arising.
David Buchler
Chairman
25 May 2022
*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 18.
Chief Executive's statement
Principal activities
The Company is a holding company that identifies and invests in undervalued
and/or distressed businesses and securities as well as businesses that are
complementary to existing Group companies. The Company provides management
services to those businesses. The sole activity of the trading subsidiaries
during the year was food manufacturing.
Operating review
The results for 2021 reflect the trading performance of Shire Foods Limited
("Shire") and Indulgence Patisserie Limited ("Indulgence"). Shire performed
extremely well in the year and Indulgence made steady progress.
Revenues for food manufacturing were £35.58 million (2020: £30.81 million),
with profit before tax and intra-group management and interest charges of
£1.13 million (2020: £0.79 million). Profit before tax was £0.79 million
(2020: £0.59 million) - with the difference being intra-group interest and
management charges.
Shire Foods
Shire, in which the Group has an 80% stake, was acquired in 2011 and
manufactures frozen pies, pasties and other pastry products for food retailers
and food service customers from its factory in Royal Leamington Spa, UK.
Shire continued to grow in 2021, with revenues increasing by approximately
12.6% to a new high of £30.61 million (2020: £27.19 million) and a solid
profit before tax, intra-group interest and management charges of
approximately £2.14 million (2020: £1.81 million). Profit before tax was
£1.89 million (2020: £1.61 million) - with the difference being intra-group
interest and management charges.
Growth in the food service sector was encouraging, reflecting the UK's unwinding of COVID-19 restrictions. The retail sector was buoyant, with our focus on new product development continuing to deliver new opportunities with existing customers. A number of products manufactured by us won awards in 2021, not least the BBC Good Food Christmas Taste Awards 2021, in which our product won the Best Vegan Main category. Naughty Vegan, the Group's own vegan brand, won The Grocer's Best Vegan Party Food Award for its No Piggy in the Middle sausage rolls. Whilst we continue to develop Naughty Vegan, we have a limited budget for brand development, which means that progress is inevitably slow.
Throughout the year the company was not immune from the effects of labour shortages, transport and supply disruption and the additional costs of working within the COVID-19 environment. Working in partnership with suppliers and customers, combined with the resilience and flexibility of our staff, were able to navigate successfully through a challenging period.
Further information about Shire can be found at
www.shirefoods.com (http://www.shirefoods.com)
.
Indulgence Patisserie
Indulgence, which is wholly owned, was acquired in February 2020, and
manufactures premium frozen cakes and desserts, supplying customers in the UK
and Europe from its base in Colchester, UK.
Indulgence achieved revenues of £4.97 million, representing growth of
approximately 21% compared with the prior period on an annualised basis (2020:
period 7 February - 31 December 2020 £3.62 million). The loss before tax,
intra-group interest and management charges was approximately £1.01 million
(2020: loss £1.02 million). The loss before tax was £1.10 million (2020:
loss £1.02 million) - with the difference being intra-group interest and
management charges.
Over the course of the year there was an increase in activity in the food
service sector but, with most of Indulgence's foodservice customers located in
Europe, the pandemic trading restrictions endured for longer than was the case
for Shire. We managed to grow the retail customer base substantially in the
period, however the return to normal trading has nevertheless been slower than
we originally expected.
Our raw material costs - particularly dairy - increased dramatically in 2021
and that has continued in the first part of 2022. In addition, availability
of ingredients and reliable logistics have at times hampered progress and
resulted in delays and additional costs. During the year, we invested in new
plant and machinery and in 2022 strengthened the management team. Whilst we
expect that the business's performance will show improvement in the coming
months as the effects of increased prices, reduced headcount and manufacturing
efficiencies improve margins, the situation is finely balanced.
The Group has continued to fund the initial purchase, working capital and
trading losses by way of intra-Group loans.
Further information about Indulgence can be found at www.indulgence.co.uk
(http://www.indulgence.co.uk) .
COVID-19
The safety of our staff and site visitors has been, and remains, very
important to us. Throughout the COVID-19 pandemic we put in place measures to
protect their well-being as much as we reasonably could. We have been able
to reduce some measures in 2022 but we remain alert to ensure that any
resurgence in the virus would not lead to site-wide transmission and would be
identified at an early stage.
Investing and management services
The Group's investing and management services segment comprises central
overheads, partially offset by management and interest charges to Group
companies and returns from treasury management activities on current asset
investments.
Outlook
There is an inevitable lag in the recovery from our customers of input cost
increases. Shire, which is the most substantial part of our trading activity,
has a more established position in the market compared to Indulgence and so
the challenges in passing on those increases there have been lower. Indulgence
is rebuilding its market position and we are cognisant of the need to build
deeper and wider relationships with our key customers for the longer term.
Furthermore, Indulgence's success depends on a number of factors, not all of
which are easy to predict at this stage. However, we remain focussed on
building and increasing profitability in both businesses.
The inflationary environment has created challenges but has also created a
much bigger pool of distressed targets. We continue to review candidates for
acquisition in food manufacturing as well as in other sectors. The Group's
high liquidity puts it in a strong position to capitalise on such
opportunities as they arise.
What we have achieved in 2021 would not have been possible without the
extraordinary efforts of our staff. We are grateful to all of them for their
hard work and continuing commitment to our success.
Jonathan Lander
Chief Executive
25 May 2022
Financial review
Financial performance
Detailed information about the Group's segments is set out in note 5, which
should be read in conjunction with this financial review and the Chairman's
and Chief Executive's statements.
Overview
Group revenue from continuing operations was £35.58 million (2020: £30.81
million), an increase of more than 15%. The Group reported a profit after
tax for the year of £0.05 million, compared to a loss of £0.52 million in
2020. This year was the first full year of trading from Indulgence.
The trading performance of each of our businesses is outlined in the Chief
Executive's statement and set out further below and in note 5.
Food manufacturing
This segment includes the trading of Shire Foods and Indulgence Patisserie.
The segment consists of savoury pastry and cakes and desserts manufacturing.
Shire Foods
Revenues were £30.61 million for the year (2020: £27.19 million), with a
profit before tax, intra-group interest and management charges of
approximately £2.14 million (2020: £1.81 million). Profit before tax was
£1.89 million (2020: £1.61 million) - with the difference being intra-group
interest and management charges.
The materials margin percentage was fractionally higher than the prior year,
but labour and distribution costs increased. Overall, the additional volumes
were sufficient to offset the effects of these and profit before tax increased
as a result.
As noted in the Chief Executive's report, we continue to see material price
inflation across all cost areas and are engaging with customers to agree price
rises or identify actions to avoid passing on additional costs to them.
During 2021 the company invested a further £0.27 million (2020: £0.86
million) in new plant which was funded from Shire's cash resources. In 2022
we are expecting to invest more than in 2021 as we seek ways of increasing
efficiency and producing new product formats.
Shire was able to meet its own working capital needs throughout the year,
using external borrowings where required. In 2020 the Group had provided
£0.46 million in working capital loans to meet seasonal working capital
requirements, all of which had been repaid prior to the year end.
The 5-year financial performance of Shire is summarised in the table below:
Year ended 31 December Year ended 31 December Year ended 31 December Year ended 31 December Year ended 31 December
2021 2020 2019 2018 2017
£'000 £'000 £'000 £'000 £'000
Revenue 30,605 27,189 23,036 18,344 15,869
Underlying profit before tax, intra-group management and interest charges
2,139 1,813 1,384 854 635
Intra-group management and interest charges (252) (200) (200) (200) (200)
________ ________ ________ ________ ________
Profit before tax 1,887 1,613 1,184 654 435
Indulgence Patisserie
The business and assets of Indulgence are held in two wholly owned Group
companies, one consisting of the properties owned and occupied by Indulgence
and the other comprising the trading business. For the purposes of these
financial statements the results have again been presented as though they were
one entity since that is the way in which the Indulgence business is operated
and managed.
In 2021 the company's foodservice clients, most of which are based in Europe,
reopened for business as local lockdown restrictions were removed. The pace
of recovery was slower than in the UK, reflecting the different local
vaccination programme rollouts. Increasing our UK foodservice sales has
proven to be slower than we had hoped, in part due to the reduced ability of
restaurants to bring in new menus whilst still in reopening and recovery
mode. Undeterred, we are continuing to identify new foodservice
opportunities and believe that we can grow this segment further.
The company's retail business has been useful in terms of providing volume,
but margins were significantly reduced as significant cost increases started
to take hold in the final quarter of the year and into 2022.
The recent financial performance of Indulgence is summarised in the table
below:
Year ended 31 December 7 February - 31 December
2021 2020
£'000 £'000
Revenue 4,973 3,620
Underlying loss before tax, intra-group management and interest charges (1,007) (1,018)
Intra-group management and interest charges (92) -
________ ________
Loss before tax (1,099) (1,018)
Throughout the period the Group has provided working capital loans to
Indulgence. The amounts provided as at 31 December 2021 were as follows:
As at 31 December As at 31 December
2021 2020
£'000 £'000
Brought forward (2020: Acquisition of business and assets) 4,240 1,307
Working capital loans provided during period 1,315 2,933
________ ________
Group loans outstanding* 5,555 4,240
* excluding intra-Group trading balances
Investment revenues, other gains and losses and finance income and expense
Whilst continuing to review and assess further investments in trading
activities, the Group continued to hold significant cash. All cash has been
held on deposit at UK banks but prevailing low interest rates have meant no
investment revenues in the year (2020: £0.08 million).
The Group's net finance expense was £0.14 million (2020: net £0.07
million). In line with prior years, individual Group trading companies
utilise leverage where appropriate, and without recourse to the remainder of
the Group, which attracts some external interest expense.
Statement of financial position
Overall position
Year-end Group net assets were broadly in line with the prior year at £37.05
million (2020: £37.18 million).
Cash and current investments
Year-end cash totalled £21.87 million (2020: £23.71 million), a reduction of
£1.84 million. The Group's cash flows are set out in the consolidated
statement of cash flows.
Outside of the underlying trading results from operations and associated
working capital movements, the principal outflows of cash during the year
arose from the purchase of plant and equipment (£0.47 million) and the
repayment of borrowings (£0.44 million).
Dividends
In accordance with the policy set out at the time of admission to AIM, the
Board is not recommending the payment of a dividend at this time and prefers
to retain such profits as they arise for investment in future opportunities,
or to purchase its own shares for treasury where that is considered to be in
the best interests of shareholders.
Purchase of own shares
During the year the Company purchased 3,500 (2020: 3,000) of its own shares,
which are held in treasury, at a cost of £0.04 million (2020: £0.04
million).
Earnings per share
Basic and diluted loss per ordinary share from continuing operations was
(11.6)p (2020: (40.4)p). Total basic and diluted loss per ordinary share
were (11.6)p (2020: (40.4)p).
Investing strategy
The Company's investing strategy is to invest in, or acquire: quoted companies
where, in the Directors' opinion, the market capitalisation does not reflect
the value of the assets; any company that is in distress but offers the
possibility of a turnaround; and any company that fits strategically with an
existing portfolio investment.
The Company may also invest in quoted or unquoted start-up, early or
development-stage companies in sectors where the Directors have experience of
investing or where they have identified management teams with experience in
those areas.
The Company may invest in any company (or similar structure) or third-party
fund on a short or long-term basis, where the Directors have experience of
investing, especially where such investment is complementary to an existing,
or similar to a past, investment of the Company.
The Company may also create and invest in fund vehicles owned, managed or
controlled by the Company, including where there is the possibility of raising
third party investment; and invest in third party funds where the investment
strategy of those funds is in the Directors' opinion similar to that of the
Company, and specifically including funds that invest in distressed debt and
equity, or that invest in derivative securities of distressed debt or equity.
The Company has a preference for active rather than passive investing and for
holding a small number of investments, including a single investment, and does
not necessarily seek to diversify risk across a wide range of investments,
unless this can be achieved without affecting the Company's active investment
style. The Company's preference is to make investments in the UK and
Continental Europe.
Where the Company makes a direct investment, investment decisions will be made
by the Directors, who collectively have many years of experience in selecting
and managing investments. Investments made by fund vehicles, if owned, managed
or controlled by the Company, will be made by the executives of the investment
manager of the fund vehicle, which will include representatives of the Board.
Investments made by fund vehicles owned, managed or controlled by third
parties, will normally be made by the fund investment manager which may or may
not include the involvement of Company executives.
Screening and due diligence of potential investments (including any initial
investment in a fund vehicle) will be carried out by the executive management
of the Company. Any decision on whether to proceed will be made by the
unanimous decision of the Board.
Outside consultants and professional advisers will be used where appropriate
but the Company will endeavour to keep this to a minimum in order to control
expenses.
The Board seeks shareholder approval for the investing strategy on an annual
basis. The Directors expect to be able to find suitable investment or
acquisition candidates within the next 12 months, however there is no time
limit and if no suitable acquisition or investment has been identified before
the Company's next annual general meeting, the Directors may review the
Company's investing strategy at that time.
Key performance indicators (KPIs)
The Group uses key performance indicators suitable for the nature and size of
the Group's businesses. The key financial performance indicators are revenue
and profit before tax. The performance of the Group and the individual
trading businesses against these KPIs is outlined above, in the Chief
Executive's statement and disclosed in note 5.
Internally, management uses a variety of non-financial KPIs as follows: in
respect of the food manufacturing sector order intake, manufacturing output
and sales are monitored weekly and reported monthly.
Principal risk factors
The Company and Group face a number of specific business risks that could
affect the Company's or Group's success. The Company and Group invests in
distressed businesses and securities, which by their nature often carry a
higher degree of risk than those that are not distressed.
The Group's businesses are principally engaged in the provision of goods and
services that are dependent on the continued employment of the Group's
employees and availability of suitable, profitable workload. In the food
manufacturing segment, there is a dependency on a small number of customers
and a reduction in the volume or range of products supplied to those customers
or the loss of any one of them could impact the Group materially. Rising
inflation, including increases in raw materials and overhead costs, may not be
able to be passed on to customers through increased prices and this could
result in reduced profitability. Any pandemic or other such similar event
which could affect consumers, supplier, customers or staff may limit or
inhibit the Group's operations.
These risks are managed by the Board in conjunction with the management of the
Group's businesses.
More information on the Group's financial risks is disclosed in note 15.
Energy and carbon reporting
As neither Volvere plc nor any qualifying subsidiaries have consumed more than
40,000 kWh of energy in this reporting period, they qualify as low energy
users under the regulations and are not required to report on any emissions,
energy consumption or energy efficient activities.
Statement by the Directors relating to their statutory duties under s172(1)
Companies Act 2006
The Board of Directors considers, both individually and together, that they
have acted in the way they consider, in good faith, would be most likely to
promote the success of the company for the benefit of the members as a whole
(having regard to the stakeholders and the matters set out in s172(1)(a-f) of
the Act) in the decisions taken during the year ended 31 December 2021.
The Company is a holding company for which the investing strategy is approved
by members annually at the Company's Annual General Meeting. The Company's
success in following this investing strategy is measurable in terms of the
value arising over time from the Company's investments.
The Board of Directors had regard, amongst other matters, to the:
· likely consequences of any decision on the long term;
· interests of the Group's employees;
· need to foster relationships with customers, suppliers and
others;
· impact of the Group's operations on the communities in which the
Group's businesses operate;
· impact of the Group's operations on the environment;
· desirability of maintaining a reputation for high standards of
business conduct;
· need to act fairly between the members of the Company.
The broad range of stakeholders and their interests means that it may not be
possible to deliver outcomes that meet all individual interests. Whilst
there is an inherent and probable interdependency between the success of the
Company's underlying investments and the Company itself over time, there may
be occasions where actions in relation to those investments taken, or not
taken, in the interests of the Company's stakeholders' by the Board could be
perceived as, or be, in conflict with stakeholder interests in the investments
themselves.
The Board engages with the Group's stakeholders both directly and indirectly
at an operational level through the Group's management responsibility
structure. Direct engagement includes members of the Board communicating
with stakeholders personally in appropriate circumstances. In addition, the
Board reviews and challenges the strategies and financial and operational
performances of its individual trading businesses, including risk management,
legal and regulatory compliance, through periodic reporting processes and
management review meetings. The Company makes Stock Market announcements
whenever required or considered necessary.
The Board:
· ensures that any recommendations from relevant regulators are
properly considered;
· assesses risk in the application of capital when making
investment decisions and in making follow-on investments, whether by way of
equity or debt;
· through its own and its subsidiaries' employment practices seeks
to reward employees fairly and to create a safe and secure environment;
· encourages its subsidiaries to maintain regular, open and honest
contact with their customers and suppliers, working collaboratively;
· encourages subsidiaries to support charitable activities in their
local communities and to consider the impact of their operations on the local
community;
· seeks to minimise negative effects of the Company's operations on
the environment by minimising travel and encouraging its subsidiaries to
minimise waste and recycle materials wherever practicable.
These activities give the Board an overview of stakeholder engagement and
effectiveness, including opportunities to improve further, and enables the
Directors to comply with their legal duty under s172 of the Companies Act
2006.
Nick Lander
Chief Financial & Operating Officer
25 May 2022
Corporate governance report
All members of the Board believe in the value and importance of good corporate
governance and in our accountability to all the Group's stakeholders,
including shareholders, staff, clients and suppliers. In the statement below,
we explain our approach to governance, and how the Board and its committees
operate.
The corporate governance framework which the Group operates, including Board
leadership and effectiveness, Board remuneration, and internal control is
based upon practices which the Board believes are proportionate to the size,
risks, complexity and operations of the business and is reflective of the
Group's values. We have partially adopted and partially comply with the
Quoted Companies Alliance's ("QCA") Corporate Governance Code for small and
mid-size quoted companies (revised in April 2018 to meet the requirements of
AIM Rule 26).
The QCA Code is constructed around ten broad principles and a set of
disclosures. We have considered how we apply each principle to the extent
that the Board judges these to be appropriate in the circumstances, and below
we provide an explanation of the approach taken in relation to each. Except as
set out below, the Board considers that it does not depart from any of the
principles of the QCA Code. The information below was last updated on 23 July
2021.
The following paragraphs set out the Group's compliance (or otherwise) with
the ten principles of the QCA Code.
1. Establish a strategy and business model which promote long-term value
for shareholders
Explanation
The Company's strategy is to identify and invest in undervalued and/or
distressed businesses and securities as well as businesses that are
complementary to existing Group companies. The Company provides management
services to those businesses.
Since 2002 the Company's shares have been traded on the Alternative Investment
Market ("AIM") of the London Stock Exchange (ticker VLE).
In order to execute the Company's strategy successfully, the following key
issues are addressed:
Investment Identification - the Company's executive directors are responsible
for identifying potential investments. This is done through maintaining
relationships with intermediaries and through personal networks.
Investment Assessment - the Company's executive directors are responsible for
assessing potential investments as a basis for delivering long-term
shareholder value. This is done principally by undertaking due diligence on
such investments, such work being done largely by the executive directors
themselves. Where considered necessary, cost-effective and practicable,
external advisers may be used.
Investment Structuring - the Company's executive directors are responsible for
determining the initial investment structure relating to potential
investments. Investments have individual management teams and risk and
reward profiles and the Company puts in place an investment structure that
seeks to balance the risks and potential rewards for all such stakeholders.
Investment Performance Improvement - the Company's executive directors are
responsible for implementing a strategy that improves the performance of
investments (where such investments are not simply held for treasury
purposes). This will typically involve board leadership and an appropriate
level of operational involvement to ensure that financial and operational
risks are minimised through increased profitability and cash generation.
This is typically done by improving customer service and quality, clearer
financial reporting and control, increasing management responsibility and
target setting.
Investment Exit - the Board is responsible for assessing the optimum time to
exit from an investment. This is determined based on a range of factors,
including the potential divestment valuation, the nature of any potential
acquirer, the external environment and other stakeholder intentions.
Compliance Departure and Reason - None.
2. Seek to understand and meet shareholder needs and expectations
Explanation
Responsibility for investor relations rests with the CEO, supported by the
CFO. The Company communicates in different ways with its shareholders to
ensure that shareholder needs and expectations are clearly understood.
Communication with shareholders is principally through the Annual Report and
Accounts, full-year and half-year announcements, trading updates and the
annual general meeting ("AGM"). A range of corporate information (including
all Company announcements) is also available to shareholders, investors and
the public on our website. The AGM is the principal opportunity for dialogue
with private shareholders, and all Board members seek to attend it and answer
shareholder questions. The Notice of Meeting is sent to shareholders at
least 21 days before the meeting. In addition, the CEO attends potential
investor shows in order to increase the Company's profile.
Compliance Departure and Reason - None.
3. Take into account wider stakeholder and social responsibilities and
their implications for long-term success
Explanation
The Group's ability to deliver on its strategy is dependent partly upon its
effective engagement with stakeholders and a wider recognition of the social
implications of its operations. In all businesses, the typical key
stakeholders are shareholders, customers, staff and suppliers.
Customers - in all businesses the Group seeks to provide clients with products
and services that are differentiated from competitors. This is done through
meeting clients to understand their needs and through understanding
competitors' offerings.
Staff - the Group's staff are critical to delivering client satisfaction over
the longer term. All Group companies have in place staff communication
forums and flat management structures, which aid communication. Group
management is accessible to company staff. In situations where individual
subsidiary decisions would impact on staff security or morale, the relevant
company will seek to minimise the impact on staff.
Suppliers - to varying degrees the Group is dependent upon the reliable and
efficient service of its supply chain. In the case of significant suppliers,
each Group company will meet periodically with them to review and determine
future trading arrangements and to share the relevant company's requirements
of that supplier.
Compliance Departure and Reason - None.
4. Embed effective risk management, considering both opportunities and
threats, throughout the organisation
Explanation
Recognising and managing business risks is key to ensuring the delivery of
strategy and the creation of long-term shareholder value.
As part of the Group's annual reporting to shareholders, specific financial
risks are evaluated, including those related to foreign currency, interest
rates, liquidity and credit. The Group's key risks are set out in the Annual
Report & Accounts.
The nature of the Group's operations is such that individual companies are
organised independently and operate business and IT systems that are
appropriate to their individual businesses. The Audit Committee reviews the
findings of the Group's auditors and considers whether there are remedial
actions necessary to improve the control environment in each company.
The Group has in place an Anti-Bribery Policy and a Share Dealing Code that
apply to staff.
Compliance Departure and Reason - None.
5. Maintain the board as a well-functioning, balanced team led by the
chair
Explanation
Board members have a collective responsibility and legal obligation to promote
the interests of the Company and are collectively responsible for defining
corporate governance arrangements. Ultimate responsibility for the quality
of, and approach to, corporate governance lies with the chair of the Board.
The Board consists of three directors of which two are executive and one (the
Chairman) is non-executive. The Chairman is considered independent and
independent directors will stand for re-election on an annual basis in the
event of having more than 10 years continuous board service. The QCA Code
requires that the Company has two non-executive directors.
The board is supported by both Audit and Remuneration committees, the member
of each of which is the Chairman.
The Board meets formally on a regular basis (typically 4-6 times per annum),
with interim meetings convened on an as-required basis. The Audit committee
undertakes an annual review and the Remuneration committee undertakes reviews
on an as-required basis. All directors commit the required time to meet the
needs of the Group from time-to-time.
Compliance Departure and Reason - As currently constituted the Board includes
only one non-executive director. The Board considers that the size of the
Group does not merit the appointment of an additional non-executive director
but will continue to review this over time.
6. Ensure that between them the directors have the necessary up-to-date
experience, skills and capabilities
Explanation
The Company's directors are David Buchler (Chairman), Jonathan Lander (CEO)
and Nick Lander (COO/CFO). All members of the Board have experience relevant
to delivering the Company's strategy.
The Board believes that, as currently constituted, it has a blend of relevant
experience, skills and personal qualities to enable it to successfully execute
its strategy.
The Directors' biographies are in the Annual Report and Accounts and
incorporated here by reference.
Compliance Departure and Reason - The QCA Code requires, inter alia, that the
Company describes the relevant experience, skills, personal qualities and
capabilities that each director brings to the Board. The Board believes the
individual's biography as noted above, coupled with their successful service
to date with the Company, is sufficiently objective evidence that the Board
has the necessary requirements to fulfil their roles individually and
collectively.
7. Evaluate board performance based on clear and relevant objectives,
seeking continuous improvement
Explanation
The Board does not formally review the effectiveness of itself as a unit nor
of the Remuneration and Audit committees. The small size of the Board means
that individual directors' contributions are transparent. Where the Company
identifies potential Board members, these are noted for any possible future
vacancies as part of succession planning or to bring in additional skills or
capabilities.
Compliance Departure and Reason - Where the need for Board changes has become
evident in the past, the necessary changes have been implemented. It is not
considered necessary to formally review performance given this embedded
approach, whereby review of effectiveness is continuous.
8. Promote a corporate culture that is based on ethical values and
behaviours
Explanation
The nature of the Group's businesses are diverse and, by their nature, may
have different cultures and values relevant to their sector. However, there
are some core values that the Group adopts throughout all its businesses,
irrespective of their nature and size.
These values are: honesty, integrity, openness and respect. The Board leads
by example, demonstrating through its collective actions and individually as
directors through theirs, to local management teams and staff. The Company
has an Anti-bribery Policy and makes an annual Modern Slavery statement.
Compliance Departure and Reason - None.
9. Maintain governance structures and processes that are fit for purpose
and support good decision-making by the board
Explanation
The Board provides strategic leadership for the Group and operates within
the scope of a robust corporate governance framework. Its purpose is to ensure
the delivery of long-term shareholder value, which involves setting the
culture, values and practices that operate throughout the Group's businesses
as well as defining its strategic goals. The Board has approved terms of
reference for its Audit and Remuneration committees to which certain
responsibilities are delegated.
The individual roles and responsibilities of the Board, the Board members and
the Audit and Remuneration Committees are set out below.
Role and Responsibilities of Chairman The Chairman is independent and from an external perspective, engages with
shareholders at the Company's Annual General Meeting to reinforce the fact
that the Board is being run with the appropriate level of engagement and time
commitment. From an internal perspective, he ensures that the information
which flows within the board and its sub committees is accurate, relevant and
timely and that meetings concentrate on key operational and financial issues
which have a strategic bias, together with monitoring implementation plans
surrounding commercial objectives.
In relation to corporate governance, his responsibility is to lead the board
effectively and to oversee the adoption, delivery and communication of the
Company's corporate governance model. He also aims to foster a positive
governance culture throughout the Company working through the CEO and COO/CFO.
Roles and Responsibilities of CEO The CEO is responsible for recommending and ensuring effective delivery of the
Group's strategy and achieving financial performance commensurate with that
strategy.
The CEO works with the Chairman and COO/CFO in an open and transparent way and
keeps them up-to-date with matters of importance and relevance to delivering
the strategy.
Roles and Responsibilities of COO/CFO The COO/CFO is responsible for the operational aspects of the Group's
businesses and for maintaining a robust financial control and reporting
environment throughout.
Role of the Board The Board of a company is responsible for setting the vision and strategy for
the Company to deliver value to its shareholders by effectively putting in
place its business model. The Board members are collectively responsible for
defining corporate governance arrangements to achieve this purpose, under
clear leadership by the Chairman.
The Board is authorised to manage the business of the Company on behalf of its
shareholders and in accordance with the Company's Articles of Association. The
Board is responsible for overseeing the management of the business and for
ensuring high standards of corporate governance are maintained throughout the
Group.
The Board meets several times a year and at other times as necessary, to
discuss a formal schedule of matters specifically reserved for its decision.
These matters routinely include:
· - Group strategy and associated risks
· - Financial performance of the Group's businesses and approval of
annual budgets, the half year results, annual report and accounts and
dividends
· - Changes relating to the Group's capital structure or share
buy-backs
· - Appointments to and removal from the Board and Committees of
the Board given the absence of a separate nomination committee
- Acquisitions, disposals and other material transactions
- Actual or potential conflicts of interest relating to any Director are
routinely identified at all Board discussions
Role of Audit Committee The Audit Committee provides confidence to shareholders on the integrity of
the financial results of the Company expressed in the Annual Report and
Accounts and other relevant public announcements of the company. The Audit
Committee challenges both the external auditors and the management of the
Company. It keeps the need for internal audit under review. It is responsible
for the assessing recommendations to the Board on the engagement of auditors
including tendering and the approval of non-audit services, for reviewing the
conduct and control of the annual audit and for reviewing the operation of the
internal financial controls.
It also has responsibility for reviewing financial statements prior to
publication and reporting to the Board on any significant reporting issues,
estimates and judgements made in connection with the preparation of the
Company's financial statements.
The Audit Committee, in conjunction with the rest of the Board, also has a key
role in the oversight of the effectiveness of the risk management and internal
control systems of the Company.
Members: David Buchler
Role of Remuneration Committee It is the role of the Remuneration Committee to ensure that remuneration
arrangements are aligned to support the implementation of Company strategy and
effective risk management for the medium to long-term, and to take into
account the views of shareholders.
The Company's remuneration policy has been designed to ensure that it
encourages and rewards the right behaviours, values and culture.
The Remuneration Committee reviews the performance of the executive directors,
sets the scale and structure of their remuneration and the basis of their
service agreements with due regard to the interests of shareholders and
reviews and approves any proposed bonus entitlement. It also determines the
allocation of share options to employees.
Members: David Buchler
The Board has approved the adoption of the QCA Code as its governance
framework against which this statement has been prepared and will monitor the
suitability of this code on an annual basis and revise its governance
framework as appropriate as the Group evolves. The Board is satisfied that the
current framework will evolve in line with the current growth plans of the
Group.
Compliance Departure and Reason - None.
10. Communicate how the company is governed and is performing by maintaining
a dialogue with shareholders and other relevant stakeholders
Explanation
A healthy dialogue should exist between the Board and all of its stakeholders,
including shareholders, to enable all interested parties to come to informed
decisions about the Company. In particular, appropriate communication and
reporting structures should exist between the Board and all constituent parts
of its shareholder base. This will assist:
· the communication of shareholders' views to the Board; and
· the shareholders' understanding of the unique circumstances and
constraints faced by the Company. It should be clear where these communication
practices are described (annual report or website).
The Group's Annual Report and Accounts and other governance-related material,
along with notices of all general meetings over the last five years (as a
minimum) are accessible via the Company's website.
Audit Committee Report - the Audit Committee's annual meeting is minuted. All
matters raised by the Group's auditors are carefully considered and actions
implemented where considered appropriate. The approach and role of the Audit
Committee is noted in section 9 above.
Remuneration Committee Report - the Remuneration Committee's meetings are
minuted. The remuneration of the Board is set out in the Annual Report and
Accounts. The approach and role of the Remuneration Committee is noted in
section 9 above.
Compliance Departure and Reason - The Audit Committee and Remuneration
Committee have not prepared formal reports as required by the Code. Given the
small size of the Board, such formal reporting is not considered necessary.
Consolidated income statement
Note 2021 2020
£'000 £'000
Continuing operations
Revenue 5 35,578 30,809
Cost of sales (29,682) (25,803)
Gross profit 5,896 5,006
Distribution costs (2,223) (1,857)
Administrative expenses (3,470) (3,624)
Operating profit/(loss) 2 203 (475)
Finance expense 6 (137) (152)
Finance income 6 - 80
Profit/(loss) before tax 66 (547)
Income tax credit/(expense) 7 (11) 29
Profit/(loss) for the year from continuing operations 55 (518)
Profit/(loss) for the year 55 (518)
Attributable to:
- Equity holders of the parent (299) (792)
- Non-controlling interests 354 274
55 (518)
Earnings per share 8
Basic (11.6)p (40.4)p
- from continuing operations - -
- from discontinued operations
Total (11.6)p (40.4)p
Diluted
- from continuing operations (11.6)p (40.4)p
- from discontinued operations - -
Total (11.6)p (40.4)p
2021
2020
Consolidated statement of comprehensive income
£'000 £'000
Profit/(loss) for the year 55 (518)
Other comprehensive income
Deferred tax recognised directly in equity (140) 1,065
Total comprehensive income for the year (85) 547
Attributable to:
- Equity holders of the parent (411) 60
- Non-controlling interests 326 487
(85) 547
Consolidated statement of changes in equity
Share Share Retained Total Non-controlling interests Total
£'000
capital premium Revaluation earnings £'000 £'000
£'000 £'000 reserve £'000
£'000
2021
Profit for the year - - - (299) (299) 354 55
Deferred tax recognised directly in equity - - (112) - (112) (28) (140)
Total comprehensive income for the year - - (112) (299) (411) 326 (85)
Balance at 1 January 50 7,885 939 26,229 35,103 2,076 37,179
Transactions with owners:
Purchase of own treasury shares - - - (44) (44) - (44)
Total transactions with owners - - - (44) (44) - (44)
Balance at 31 December 50 7,885 827 25,886 34,648 2,402 37,050
Share Share Retained Total Non-controlling interests Total
£'000
capital premium Revaluation earnings £'000 £'000
£'000 £'000 reserves £'000
£'000
2020
Loss for the year - - (13) (779) (792) 274 (518)
Revaluation of property - - 852 - 852 213 1,065
Total comprehensive income for the year - - 839 (779) 60 487 547
Balance at 1 January 50 3,640 100 21,610 25,400 1,589 26,989
Transactions with owners:
Sale of own treasury shares - 4,245 - 5,437 9,682 - 9,682
Purchase of own treasury shares - - - (39) (39) - (39)
Total transactions with owners - 4,245 - 5,398 9,643 - 9,643
Balance at 31 December 50 7,885 939 26,229 35,103 2,076 37,179
Consolidated statement of financial position
2021 2020
Note £'000 £'000
Assets
Non-current assets
Property, plant and equipment 10 9,306 9,956
Total non-current assets 9,306 9,956
Current assets
Inventories 11 4,384 4,020
Trade and other receivables 12 8,874 7,185
Cash and cash equivalents 13 21,871 23,711
Total current assets 35,129 34,916
Total assets 44,435 44,872
Liabilities
Current liabilities
Loans and other borrowings 16 (1,452) (1,452)
Leases 16 (392) (388)
Trade and other payables 14 (3,379) (3,333)
Total current liabilities (5,223) (5,173)
Non-current liabilities
Loans and other borrowings 16 (933) (1,044)
Leases 16 (691) (1,087)
Total non-current liabilities (1,624) (2,131)
Total liabilities (6,847) (7,304)
Provisions - deferred tax 17 (538) (389)
Net assets 37,050 37,179
Equity
Share capital 18 50 50
Share premium account 19 7,885 7,885
Revaluation reserves 19 827 939
Retained earnings 25,886 26,229
Capital and reserves attributable to equity holders of the Company 34,648 35,103
Non-controlling interests 22 2,402 2,076
Total equity 37,050 37,179
Consolidated statement of cash flows
2021 2021 2020 2020
Note £'000 £'000 £'000 £'000
Profit/(loss) for the year 55 (518)
Adjustments for:
Finance expense 6 137 152
Finance income 6 - (80)
Depreciation 10 1,131 979
Operating lease rentals (68) (59)
Income tax expense/(credit) 7 11 (29)
1,211 963
Operating cash flows before movements in working capital 1,266 445
Increase in trade and other receivables (1,688) (2,369)
Increase in trade and other payables 42 928
Increase in inventories (379) (1,723)
Cash used by operations (759) (2,719)
Investing activities
Purchase of property, plant and equipment 10 (467) (957)
Interest received 6 - 80
Acquisition of business - (1,234)
Net cash used by investing activities (467) (2,111)
Financing activities
Interest paid 6 (130) (144)
Purchase of own shares (treasury shares) 18 (44) (39)
Sale of own shares (treasury shares) 18 - 9,682
Net (repayment) of borrowings (440) (275)
Net cash generated (used by)/from financing activities (614) 9,224
Net (decrease)/increase in cash (1,840) 4,394
Cash at beginning of year 23,711 19,317
Cash at end of year 21,871 23,711
Notes forming part of the final results
1 Accounting policies
The financial information set out above, which was approved by the Board on 24
May 2022, is derived from the full Group accounts for the year ended 31
December 2021 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 2021, will be delivered to the Registrar of Companies in due
course. Copies of the Company's Annual Report and Financial Statements are
expected to be sent to shareholders on 31 May 2022 and will be available
online at www.volvere.co.uk.
Basis of accounting
These financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS and IFRIC interpretations) as adopted by
the United Kingdom ("adopted IFRS") and with those parts of the Companies Act
2006 applicable to companies preparing their accounts under adopted IFRS.
The following principal accounting policies have been applied consistently, in
all material respects, in the preparation of these financial statements:
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chief
Executive's statement and Financial review. In addition, note 15 to the
financial statements includes the Group's objectives, policies and processes
for managing its capital; its financial risk management objectives; details of
its financial instruments and hedging activities; and its exposures to credit
risk and liquidity risk.
The Group has considerable financial resources and, as a consequence, the
directors believe that the Group is well placed to manage the business risks
inherent in its activities despite the current uncertain economic outlook.
The directors have a reasonable expectation that the Group has adequate
resources to enable it to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern basis of
accounting in preparing the annual financial statements.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 December each year. Control is achieved where the Company has the
power to govern the financial and operating policies of an investee entity so
as to obtain benefits from its activities. All subsidiaries have a reporting
date of 31 December.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate. All
intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Non-controlling interests, presented as part of equity, represent the portion
of a subsidiary's profit or loss and net assets that is not held by the Group.
The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent and the non-controlling interests based on
their respective ownership interests.
The results and net assets of subsidiaries whose accounts are denominated in
foreign currencies are retranslated into Sterling at average and year-end
rates respectively.
Business combinations
The Group applies the acquisition method of accounting for business
combinations. The consideration transferred by the Group to obtain control
of a subsidiary is calculated as the sum of the acquisition-date fair values
of assets transferred, liabilities incurred and equity interests issued by the
Group, which includes the fair value of any asset or liability arising from a
contingent consideration arrangement. Acquisition costs are expensed as
incurred.
The Group recognises identifiable assets acquired and liabilities assumed in a
business combination regardless of whether they have been previously
recognised in the acquiree's financial statements prior to the acquisition.
Assets acquired and liabilities assumed are measured at their acquisition-date
fair values.
Goodwill is stated after separate recognition of identifiable intangible
assets. It is calculated as the excess of the sum of the fair value of
consideration transferred, the recognised amount of any non-controlling
interest in the acquiree and the acquisition-date fair value of any existing
equity interest in the acquiree, over the acquisition-date fair values of
identifiable net assets. If the fair values of identifiable net assets exceed
the sum calculated above, the excess amount (i.e. gain on a bargain purchase)
is recognised in profit or loss immediately.
The purchase of a non-controlling interest is not a business combination
within the scope of IFRS 3, since the acquiree is already controlled by its
parent. Such transactions are accounted for as equity transactions, as they
are transactions with equity holders acting in their capacity as such. No
change in goodwill is recognised and no gain or loss is recognised in profit
or loss.
Goodwill
Goodwill represents the future economic benefits arising from a business
combination that are not individually identified and separately recognised.
See above for information on how goodwill is initially determined. Goodwill is
carried at cost less accumulated impairment losses and is reviewed annually
for impairment.
Revenue recognition
Revenue from contracts with customers is recognised when control of the goods
or services is transferred to the customer at an amount that reflects the
consideration to which the group expects to be entitled in exchange for those
goods or services net of discounts, VAT and other sales-related taxes. The
group concludes that it is the principal in its revenue arrangements, because
it typically controls the goods or services before transferring them to the
customer. Payment is typically due within 60 days. Contracts with customers
do not contain a financing component or any element of variable
consideration. The group does not offer an option to purchase a warranty.
Revenue from the sale of goods is recognised at the point in time when control
of the asset is transferred to the customer, generally when the customer has
taken undisputed delivery of the goods. There are no service obligations
attached to the sale of goods. Customer rebates are deducted from revenue.
If it is probable that total contract costs will exceed total contract
revenue, the expected loss is recognised immediately in profit or loss.
Discontinued operations
Discontinued operations represent cash generating units or groups of cash
generating units that have either been disposed of or classified as held for
sale and represent a separate major line of business or are part of a single
co-ordinated plan to dispose of a separate major line of business. Cash
generating units forming part of a single co-ordinated plan to dispose of a
separate major line of business are classified within continuing operations
until they meet the criteria to be held for sale. The post-tax profit or
loss of the discontinued operation is presented as a single line on the face
of the consolidated income statement, together with any post-tax gain or loss
recognised on the re-measurement to fair value less costs to sell or on the
disposal of the assets or disposal group constituting the discontinued
operation. On changes to the composition of groups of units comprising
discontinued operations, the presentation of discontinued operations within
prior periods is restated to reflect consistent classification of discontinued
operations across all periods presented.
Operating segments
IFRS 8 "Operating Segments" requires the disclosure of segmental information
for the Group on the basis of information reported internally to the chief
operating decision-maker for decision-making purposes. The Group considers
that the role of chief operating decision-maker is performed collectively by
the Board of Directors.
Volvere plc is a holding company that identifies and invests principally in
undervalued and distressed businesses and securities as well as businesses
that are complementary to existing Group companies. Its customers are based
primarily in the UK and Europe.
Financial information (including revenue and profit before tax and intra-group
charges) is reported to the board on a segmental basis. Segment revenue
comprises sales to external customers and excludes gains arising on the
disposal of assets and finance income. Segment profit reported to the board
represents the profit earned by each segment before tax and intra-group
charges. For the purposes of assessing segment performance and for
determining the allocation of resources between segments, the board reviews
the non-current assets attributable to each segment as well as the financial
resources available. All assets are allocated to reportable segments.
Assets that are used jointly by segments are allocated to the individual
segments on a basis of revenues earned.
All liabilities are allocated to individual segments. Information is
reported to the Board of Directors on a segmental basis as management believes
that each segment exposes the Group to differing levels of risk and rewards
due to their varying business life cycles. The segment profit or loss,
segment assets and segment liabilities are measured on the same basis as
amounts recognised in the financial statements. Each segment is managed
separately.
Where one company within a segment incurs costs which relate wholly or partly
to, or shares resources with, another company within that or another segment,
a proportion of such costs are recharged to that other company. The effect is
to reduce the costs of the incurring company and to increase the costs of the
benefitting company.
Leasing
The company applies IFRS 16 Leases. Accordingly leases are all accounted for
in the same manner:
- A right of use asset and lease liability is recognised on
the statement of financial position, initially measured at the present value
of future lease payments;
- Depreciation of right-of-use assets and interest on lease
liabilities are recognised in the statement of comprehensive income;
- The total amount of cash paid is recognised in the statement
of cash flows, split between payments of principal (within financing
activities) and interest (also within financing activities)
The initial measurement of the right of use asset and lease liability takes
into account the value of lease incentives such as rent free periods.
The costs of leases of low value items and those with a short term at
inception are recognised as incurred.
Foreign currencies
Transactions in currencies other than sterling are recorded at the rates of
exchange prevailing on the dates of the transactions. At each reporting date,
monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the reporting date. Gains and losses
arising on retranslation are included in net profit or loss for the period.
Retirement benefit costs
The Group's subsidiary undertakings operate defined contribution retirement
benefit schemes. Payments to these schemes are charged as an expense in the
period to which they relate. The assets of the schemes are held separately
from those of the relevant company and Group in independently administered
funds.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from
goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects
neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is measured on an undiscounted basis using the tax rates that are
expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income statement,
except when it relates to items charged or credited directly to equity, in
which case the deferred tax is also dealt with in equity.
Property, plant and equipment
Items of property, plant and equipment are stated at cost or valuation less
accumulated depreciation and any recognised impairment loss. Freehold
property is revalued on a periodic basis. Depreciation is charged so as to
write off the cost or valuation of assets, less their residual values, over
their estimated useful lives, using the straight line method, on the following
bases:
Freehold
property
- 1.5% per annum
Plant and
machinery
- 4%-33% per annum
Investments
Investments are recognised and derecognised on a trade date where a purchase
or sale of an investment is under a contract whose terms require delivery of
the investment within the timeframe established by the market concerned, and
are initially measured at fair value, including transaction costs. Available
for sale current asset investments are carried at fair value with adjustments
recognised in other comprehensive income.
Investment income
Income from investments is included in the income statement at the point the
Group becomes legally entitled to it. Interest income and expenses are
reported on an accruals basis using the effective interest method.
Impairment of property, plant and equipment and intangible assets (including
goodwill)
At each reporting date the Group reviews the carrying amounts of its property,
plant and equipment and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and any risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but only so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income immediately, unless
the relevant asset is carried at a revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.
Share-based payments
The Group issues equity-settled share-based payments to certain directors and
employees. Equity-settled share-based payments are measured at fair value at
the date of grant. The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line basis over
the vesting period, based on the Group's estimate of options that will
ultimately vest.
Fair value is measured by use of a Black-Scholes pricing model. The expected
life used in the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions and behavioural
considerations.
Inventories
Inventories are stated at the lower of cost and net realisable value. Raw
materials are valued at purchase price and the costs of ordinarily
interchangeable items are assigned using a weighted average cost formula. The
cost of finished goods comprises raw materials directly attributable to
manufacturing processes based on product specification and packaging cost.
Net realisable value is the estimated selling price in the ordinary course
of business less any applicable selling expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, overnight deposits and
treasury deposits. The Group considers all highly liquid investments with
original maturity dates of three months or less to be cash equivalents.
Financial assets
Recognition and derecognition
Financial assets and financial instruments are recognised when the Group
becomes a party to the contractual provisions of the financial asset.
Financial assets are derecognised when the contractual rights to the cash
flows from the financial assets expire, or when the financial asset and
substantially all of the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or
expires.
Classification and initial recognition of financial assets
Except for trade receivables that do not contain a significant financing
component and are measured at the transaction price in accordance with IFRS
15, all financial assets are initially measured at fair value adjusted for
transaction costs (where applicable).
Financial asset, other than those designated and effective as hedging
instruments are classified into the following categories:
- Amortised cost
- Fair value through profit or loss (FVTPL)
- Fair value through other comprehensive income (FVOCI)
The classification is determined by both:
- The entity's business model for managing the financial asset
- The contractual cash flow characteristics of the financial asset
All income and expenses relating to financial assets that are recognised in
profit or loss are presented within finance costs, finance income or other
financial items, except for impairment of trade receivables which is presented
within administrative expenses.
Subsequent measurement of financial assets
Financial assets are measured at amortised cost if the assets meet the
following conditions (and are not designated as FVTPL):
- They are held within a business model whose objective is to hold
the financial assets and collect its contractual cash flows
- The contractual terms of the financial assets give rise to cash
flows that are solely payments of principal and interest on the principal
amount outstanding
After initial recognition, these are measured at amortised cost using the
effective interest method. Discounting is omitted where its effect is
immaterial. The Group's cash and cash equivalents, trade and most other
receivables fall into this category. This category also includes investments
in equity instruments.
Financial assets which are designated as FVTPL are measured at fair value with
gains or losses recognised in profit or loss. The fair values of financial
assets in this category are determined with reference to active market
transactions or using a valuation technique where no active market exists.
Impairment of financial assets
IFRS 9's impairment requirements use forward looking information to recognise
expected credit losses - the 'expected credit loss (ECL) method'.
Recognition of credit losses is no longer dependent on first identifying a
credit loss event, but considers a broader range of information in assessing
credit risk and credit losses including past events, current conditions,
reasonable and supportable forecasts that affect the expected collectability
of the future cash flows of the instrument.
In applying this forward looking approach, a distinction is made between:
- Financial instruments that have not deteriorated significantly
in credit quality since initial recognition or that have low credit risk
('stage 1') and
- Financial instruments that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is not low
('stage 2').
Stage 3 would cover financial assets that have objective evidence of
impairment at the reporting date.
12 month expected credit losses are recognised for the first category while
lifetime expected credit losses are recognised for the second category.
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected life of the
financial asset.
Trade and other receivables and contract assets
The group makes use of a simplified approach in accounting for trade and other
receivables as well as contract assets and records the loss allowance as
lifetime expected credit losses. These are the expected shortfalls in
contractual cash flows, considering the potential for default at any point
during the life of the financial instrument. In calculating, the Group uses
its historical experience, external indicators and forward-looking information
to calculate the expected credit losses using a provision matrix.
The Group assesses impairment of trade receivables on a collective basis, as
they possess shared credit risk characteristics, they have been grouped based
on the days past due.
Classification and measurement of financial liabilities
FVTPL: This category comprises only out-of-the-money derivatives. They are
carried in the statement of financial position at fair value with changes in
fair value recognised in the income statement.
Other financial liabilities: Other financial liabilities include trade
payables and other short-term monetary liabilities, which are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest method.
Bank and other borrowings are initially recognised at the fair value of the
amount advanced net of any transaction costs directly attributable to the
issue of the instrument. Such interest bearing liabilities are subsequently
measured at amortised cost using the effective interest method. Interest
expense in this context includes initial transaction costs and premia payable
on redemption, as well as any interest or coupon payable while the liability
is outstanding.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Invoice discounting
The Group uses an invoice discounting facility and retains all significant
benefits and risks relating to the relevant trade receivables. The gross
amounts of the receivables are included within assets and a corresponding
liability in respect of proceeds received from the facility is included within
liabilities. The interest and charges are recognised as they accrue and are
included in the income statement with other interest charges.
Significant management judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and reported amounts of assets and
liabilities, income and expenses. The nature of the Group's business is such
that there can be unpredictable variation and uncertainty regarding its
business. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
Significant management judgements (other than estimates)
The judgements that have a significant impact on the carrying value of assets
and liabilities are discussed below:
Consolidation
Management have concluded that it is not appropriate to utilise the exemption
from consolidation available to investment entities under IFRS 10 as the
company is not considered to meet all of the essential elements of the
definition of an investment entity as performance is not measured or evaluated
on a fair value basis. Accordingly the consolidation includes all entities
which the Company controls.
Deferred tax asset
The Group recognises a deferred tax asset in respect of temporary differences
relating to capital allowances, revenue losses and other short term temporary
differences when it considers there is sufficient evidence that the asset will
be recovered against future taxable profits.
This requires management to make decisions on such deferred tax assets based
on future forecasts of taxable profits. If these forecast profits do not
materialise, or there is a change in the tax rates or to the period over which
temporary timing differences might be recognised, the value of the deferred
tax asset will need to be revised in a future period.
The most sensitive area of estimation risk is with respect to losses. The
Group has losses for which no value has been recognised for deferred tax
purposes in these financial statements, as future economic benefit of these
temporary differences is not probable. If appropriate profits are earned in
the future, recognition of the benefit of these losses may result in a reduced
tax charge in a future period.
Significant estimates
Information about estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and
expenses is provided below. Actual results may be substantially different.
Useful lives of depreciable assets
The depreciation charge for an asset is derived using estimates of its
expected useful life and expected residual value, which are reviewed annually.
Increasing an asset's expected life or residual value would result in a
reduced depreciation charge in the consolidated income statement.
Management determines the useful lives and residual values for assets when
they are acquired, based on experience with similar assets and taking into
account other relevant factors such as any expected changes in technology or
regulations.
Inventories
In determining the cost of inventories management has to make estimates to
arrive at cost and net realisable value.
Furthermore, determining the net realisable value of the wider range of
products held requires judgement to be applied to determine the saleability of
the product and estimations of the potential price that can be achieved. In
arriving at any provisions for net realisable value management take into
account the age, condition and quality of the product stocked and the recent
sales trend. The future realisation of these inventories may be affected by
market-driven changes that may reduce future selling prices.
Fair value measurement
Management uses valuation techniques to determine the fair value of financial
instruments (where active market quotes are not available) and non-financial
assets. This involves developing estimates and assumptions consistent with how
market participants would price the instrument. Management bases its
assumptions on observable data as far as possible but this is not always
available. In that case management uses the best information available.
Estimated fair values may vary from the actual prices that would be achieved
in an arm's length transaction at the reporting date.
Recognition and calculation of right of use assets
Management assesses the discount rate to be applied to the leases held on an
annual basis. They ensure the discount rate is in line with market rate.
New and revised standards and interpretations applied
From 1 January 2021 the company has applied UK-adopted IAS. At the date of
application, the UK-adopted IAS and EU-adopted IFRS were the same.
The following accounting pronouncements and standards became effective from 1
January 2021 and have been adopted but did not have a significant impact on
the Group's financial results or position:
- Covid-19 related rent concessions beyond 30 June 2021 (amendments to
IFRS 16)
- Interest Rate Benchmark Reform Phase 2 (Amendments to IFRS 9, IAS
39, IFRS 7, IFRS 4 and IFRS 16)
New and revised Standards and Interpretations in issue but not yet effective
At the date of authorisation of these financial statements, the company has
not early adopted the following amendments to Standards and Interpretations
that have been issued but are not yet effective and have not been adopted
early by the Group.
Standard or
Interpretation
Effective for annual periods commencing on or after
Narrow scope amendments to IFRS 3, IAS 16 and IAS
37 1 January 2022
Annual improvements to IFRS Standards
2018-2020 1
January 2022
Amendments to IAS 1: Classification of Liabilities
1 January
2023
as Current or Non-Current
Amendments to IAS 1 and IFRS Practice Statement 2:
1 January 2023
Disclosure of Accounting Policies and classification of liabilities
As Current or Non-current
Amendments to IAS 8: Definition of Accounting
Estimates 1 January 2023
Amendments to IAS 12: Deferred Tax Related to Assets
1
January 2023
and Liabilities arising from a Single Transaction.
As yet, none of these have been endorsed for use in the UK and will not be
adopted until such time as endorsement is confirmed. The directors do not
expect any material impact as a result of adopting the standards and
amendments listed above in the financial year they become effective.
2 Operating profit/(loss)
Operating profit/(loss) is stated after charging:
2021 2020
£'000 £'000
Staff costs 6,412 6,393
Depreciation of property, plant and equipment 1,131 979
Auditor's fees - audit services 53 44
The analysis of audit fees is as follows:
- for the audit of the Company's annual accounts 9 8
- for the audit of the Company's subsidiaries' accounts 40 34
49 42
3 Staff costs
Staff costs comprise:
2021 2020
£'000 £'000
Wages and salaries 5,774 5,811
Employer's National Insurance contributions 470 433
Defined contribution pension cost 168 149
6,412 6,393
The average number of employees (including Directors) in the Group was as
follows:
2021 2020
Number Number
Engineering, production and professional 201 201
Sales and marketing 10 8
Administration and management 39 39
250 248
4 Directors' remuneration
The remuneration of the directors was as follows:
Salaries & fees Other
2021 benefits Total
£'000 2021 2021
£'000 £'000
David Buchler 45 - 45
Jonathan Lander 11 - 11
Nick Lander 11 1 12
67 1 68
Salaries & fees Other
2020 benefits Total
£'000 2020 2020
£'000 £'000
David Buchler 45 - 45
Jonathan Lander 147 - 147
Nick Lander 147 1 148
339 1 340
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 £650,000 (2020: £650,000). Amounts owed to D2L Partners LLP at
the year end totalled £nil (2020: £nil).
The amount paid to David Buchler in the year was paid to DB Consultants
Limited (which is controlled by him and is therefore a related party) and the
amount outstanding at the year end was £nil (2020: £11,250).
None of the directors were members of the Group's defined contribution pension
plan in the year (2020: none).
5 Operating segments
Analysis by business segment:
An analysis of key financial data by business segment is provided below. The
Group's food manufacturing segment, which is an aggregation of the separate
segments of savoury pastry and cake and desserts manufacturing, is engaged in
the production and sale of food products to third party customers, and the
investing and management services segment incurs central costs, provides
management services and financing to other Group segments and undertakes
treasury management on behalf of the Group. A more detailed description of
the activities of each segment is given in the Chief Executive's statement and
Financial review.
Investing and management services
Food manufacturing 2021
2021 £'000 Total
£'000 2021
£'000
Revenue 35,578 - 35,578
Profit/(loss) before tax((1)) 1,133 (1,067) 66
Investing and management services
Food manufacturing 2020
2020 £'000 Total
£'000 2020
£'000
Revenue 30,809 - 30,809
Profit/(loss) before tax((1)) 794 (1,341) (547)
Investing and management services
Food manufacturing 2021
2021 £'000 Total
£'000 2021
£'000
Assets 22,929 21,506 44,435
Liabilities and provisions (7,850) 465 (7,385)
Net assets((2)) 15,079 21,971 37,050
Investing and management services
Food manufacturing 2020
2020 £'000 Total
£'000 2020
£'000
Assets 21,320 23,552 44,872
Liabilities and provisions (7,963) 270 (7,693)
Net assets((2)) 13,357 23,822 37,179
(1) stated before intra-group management and interest charges
(2) assets and liabilities stated excluding intra-group balances
Investing and management services
Food manufacturing 2021
2021 £'000 Total
£'000 2021
£'000
Capital spend 467 - 467
Depreciation 1,130 1 1,131
Interest income (non-Group) - - -
Interest expense (non-Group) 137 - 137
Tax expense 189 (178) 11
Investing and management services
Food manufacturing 2020
2020 £'000 Total
£'000 2020
£'000
Capital spend 1,147 2 1,149
Depreciation 978 1 979
Interest income (non-Group) - 80 80
Interest expense (non-Group) 152 - 152
Tax expense 207 (236) (29)
Capital spend
1,147
2
1,149
Depreciation
978
1
979
Interest income (non-Group)
-
80
80
Interest expense (non-Group)
152
-
152
Tax expense
207
(236)
(29)
Geographical analysis:
External revenue by Non-current assets by
location of customers location of assets
2021 2020 2021 2020
£'000 £'000 £'000 £'000
UK 33,537 29,355 9,306 9,956
Rest of Europe 1,906 1,454 - -
USA 135 - - -
35,578 30,809 9,306 9,956
The Group had 4 (2020: 2) customers (all in the food manufacturing segment)
that individually accounted for in excess of 10% of the Group's revenues as
follows:
2021 2020
£'000 £'000
First customer 13,854 11,858
Second customer 6,783 8,068
Third customer 4,810 -
Fourth customer 3,732
Revenue is recognised when goods are delivered and there is minimal
uncertainty over the timing and amount of revenue recognition. The Group has
no material balances which arise from contracts with customers save for trade
receivables as set out in note 12.
6 Investment revenues, other gains and losses and finance income and
expense
2021 2020
£'000 £'000
Finance income
Bank interest receivable - 80
Finance expense
Bank interest (42) (9)
Lease interest (47) (99)
Other interest and finance charges (48) (44)
(137) (152)
7 Income tax
2021 2020
£'000 £'000
Deferred tax expense/(credit) recognised in income statement - current year 11 (29)
Total tax expense/(credit) recognised in income statement 11 (29)
Deferred tax expense recognised in equity 140 252
Total deferred tax recognised 151 223
The reasons for the difference between the actual tax expense in the income
statement for the year and the standard rate of corporation tax in the UK
applied to profits for the year are as follows:
2021 2020
£'000 £'000
Profit/(loss) before tax 66 (547)
Expected tax charge based on the prevailing rate of corporation tax in the UK 13 (104)
of 19%
Effects of:
Expenses not deductible for tax purposes 29 39
Super deduction on assets (29) -
Other adjustments 1 -
Effect of changes in rate of tax 3 7
Adjustments relating to prior periods (7) 29
Total tax recognised in income statement 11 (29)
Deferred tax assets and liabilities are recognised at rates of tax
substantively enacted as at the balance sheet date. Deferred tax assets are
recognised to the extent that they are considered recoverable. See also note
17.
8 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: 2021 2020
£'000 £'000
Profit attributable to equity holders of the parent company:
From continuing operations (299) (792)
From discontinued operations - -
EEa
Weighted average number of shares for the purposes of earnings per share: 2021 2020
No. No.
Weighted average number of ordinary shares in issue 2,571,132 1,959,290
Dilutive effect of potential ordinary shares - -
Weighted average number of ordinary shares for diluted EPS 2,571,132 1,959,290
There were no share options (or other dilutive instruments) in issue during
the year or the previous year.
9 Subsidiaries
The subsidiaries of Volvere plc, all of which have been included in these
consolidated financial statements, are as follows:
Proportion of ownership interest in ordinary shares at 31 December 2021
Registered address Principal
Name Activity
Volvere Central Services Limited Note 1 Group support services 100%
NMT Group Limited Note 2 Investment 98.6%
Shire Foods Limited Note 1 Food manufacturing 80%
Impetus Automotive Solutions Limited Note 1 Dormant 100%
New Medical Technology Limited Note 3 Dissolved on 01/03/2022 98.6%
Zero-Stik Limited Note 3 Dissolved on 01/03/2022 98.6%
Indulgence Foods Limited (formerly Naughty Vegan Limited) Note 1 Property holding company (Note 4) 100%
Indulgence Patisserie Limited (formerly Volvere Asset Management Limited) Note 1 Food Manufacturing 100%
Naughty Vegan Limited Note 1 Food Manufacturing 100%
Volvere Asset Management Limited Note 1 Dormant 100%
Note 1 - Registered at Shire House, Tachbrook Road, Leamington Spa,
Warwickshire, CV31 3SF, England.
Note 2 - Registered at 4th Floor 115 George Street, Edinburgh, EH2 4JN,
Scotland.
Note 3 - Formerly registered at c/o Wright, Johnston & Mackenzie LLP, 302
St Vincent St, Glasgow, G2 5RZ, Scotland.
Note 4 - The properties owned by this company relate solely to the
activities undertaken by Indulgence Patisserie Limited.
10 Property, plant and equipment
Freehold Plant & Machinery
Property
£'000 Total
£'000
£'000
Cost or valuation
At 1 January 2020 2,550 7,751 10,301
Additions - 1,149 1,149
Business Combination (see note 10) 950 190 1,140
Revaluation 1,200 - 1,200
Disposals - - -
At 31 December 2020 and 1 January 2021 4,700 9,090 13,790
Additions - 467 467
Disposals - (8) (8)
Revaluation - 18 18
At 31 December 2021 4,700 9,567 14,267
Accumulated depreciation
At 1 January 2020 76 2,894 2,970
Charge for the year 52 927 979
Revaluation (115) - (115)
At 31 December 2020 and 1 January 2021 13 3,821 3,834
Charge for the year 72 1,059 1,131
Eliminated on disposal - (4) (4)
At 31 December 2021 85 4,876 4,961
Net book value
At 31 December 2021 4,615 4,691 9,306
At 31 December 2020 4,687 5,269 9,956
The freehold property owned by Shire Foods Limited was revalued by an
independent valuation specialist to £3,750,000 in May 2021 and this valuation
was included as at 31 December 2020. During 2020, the company acquired
freehold properties as part of the Indulgence business combination. The
properties were purchased for £950,000. Under the historical cost model,
the carrying value of freehold property would be £3,123,700. All other
property, plant and equipment is carried at cost less accumulated
depreciation. At the year end, the Directors consider that the fair value of
the properties is not materially different from their carrying values.
Management considers there to be no indicators to suggest that any items of
property, plant and equipment are impaired. Property, plant and equipment
(which is all held within Shire Foods Limited) with a net book value of £8.08
million is pledged as collateral for Group borrowings (all of which are within
Shire Foods Limited).
Right of use assets
The Group leases certain plant and equipment. The average remaining lease term
across all leases is 1.5 years. In all cases, the lease obligations are
secured by the lessor's title to the leased assets. The right-of-use assets
included in the statement of financial position are as follows:
Amounts recognised in the statement of financial position
Group 2021 2020
£'000 £'000
Net book values 1,883 2,254
Amounts recognised in the statement of comprehensive income
Group 2021 2020
£'000 £'000
Interest expense on lease liabilities 47 99
Expense relating to short-term leases - 9
Depreciation charge for the year 365 356
The aggregate undiscounted commitments for short-term and low value leases at
the year-end was £Nil (2020 - £Nil).
11 Inventories
2021 2020
£'000 £'000
Raw materials 1,515 1,503
Finished products 2,869 2,517
4,384 4,020
The total amount of inventories consumed in the year and charged to cost of
sales was £18.73 million (2020: £16.28 million).
12 Trade and other receivables
2021 2020
£'000 £'000
Trade receivables 8,195 6,498
Less: provision for impairment of trade receivables - -
Net trade receivables 8,195 6,498
Other receivables 228 290
Prepayments and accrued income 451 397
8,874 7,185
Certain of the Group's subsidiaries have invoice discounting arrangements for
their trade receivables which are pledged as collateral. Under these
arrangements it is considered that the subsidiaries remain exposed to the
risks and rewards of ownership, principally in the form of credit risk, and so
the assets continue to be recognised. The associated liabilities arising
restrict the subsidiaries' use of the assets.
The carrying amount of the assets and associated liabilities is as follows:
2021 2020
£'000 £'000
Trade receivables 8,195 6,498
Borrowings (1,452) (1,452)
6,743 5,046
Because of the normal credit periods offered by the subsidiaries, it is
considered that the fair value matches the carrying value for the assets and
associated liabilities.
The Group is exposed to credit risk with respect to trade receivables due from
its customers, primarily in the food manufacturing segment. This segment has
a significant dependency on a small number of large customers who can and do
place significant contracts. Provisions for bad and doubtful debts are made
based on management's assessment of the risk taking into account the ageing
profile, experience and circumstances. There were no significant amounts due
from individual customers where the credit risk was considered by the
Directors to be significantly higher than the total population.
During the year, several customers were invoiced in foreign currency. The
Group does not hedge its exposure to foreign exchange risk but monitors
product margins and foreign exchange gains and losses each month. In the event
of a permanent and unfavourable movement in exchange rates, the Group would
review foreign currency-based selling prices. At the balance sheet date, trade
receivables consisted of customers invoiced in EUR and sterling as follows:
2021 2021 2020 2020
£'000 €'000 £'000 €'000
Trade receivables 7,933 301 6,432 76
The ageing analysis of trade receivables is disclosed below:
2021 2020
£'000 £'000
Up to 3 months 7,382 6,102
3 to 6 months 446 311
6 to 12 months 347 85
Over 12 months 20 -
8,195 6,498
13 Cash and cash equivalents
2021 2020
£'000 £'000
Cash at bank and in hand 21,871 23,711
14 Trade and other payables (current)
2021 2020
£'000 £'000
Trade payables 1,630 1,846
Other tax and social security 197 160
Other payables 34 34
Accruals 1,518 1,293
3,379 3,333
The fair value of all trade and other payables approximates to book value at
31 December 2021 and at 31 December 2020.
15 Financial instruments - risk management
The Group's principal financial instruments are:
· Trade receivables
· Cash at bank
· Loans and right of use leases
· Trade and other payables
The Group is exposed through its operations to the following financial risks:
· Cash flow interest rate risk
· Foreign currency risk
· Liquidity risk
· Credit risk
· Other market price risk
Policy for managing these risks is set by the Board following recommendations
from the Chief Financial & Operating Officer. Certain risks are managed
centrally, while others are managed locally following guidelines communicated
from the centre. The policy for each of the above risks is described in more
detail below.
Interest rate risk
Due to the relatively low level of borrowings, the Directors do not have an
explicit policy for managing cash flow interest rate risk. All current and
recent borrowing (other than in respect of leasing) has been on variable
terms, with interest rates of between 3% and 4% above base rate, and the Group
has cash reserves sufficient to repay all borrowings promptly in the event of
a significant increase in market interest rates. All cash is managed
centrally and subsidiary operations are not permitted to arrange borrowing
independently.
The Group's investments may attract interest at fixed or variable rates, or
none at all. The market price of such investments may be impacted positively
or negatively by changes in underlying interest rates. It is not considered
relevant to provide a sensitivity analysis on the effect of changing interest
rates since, at the year end, none of the Group's investments were interest
bearing.
Foreign currency risk
Foreign exchange risk arises when individual Group operations enter into
transactions denominated in a currency other than their functional currency
(sterling). The Directors monitor and review their foreign currency exposure
on a regular basis. The Directors are of the opinion that the exposure to
foreign currency risk is not significant.
Liquidity risk
The Group maintains significant cash reserves and therefore does not require
facilities with financial institutions to provide working capital. Surplus
cash is managed centrally to maximise the returns on deposits.
Credit risk
The Group is mainly exposed to credit risk from credit sales. The Group's
policy for managing and exposure to credit risk is disclosed in note 12.
Other market price risk
The Group has generated a significant amount of cash and this has been held
partly as cash deposits and partly invested pursuant to the Group's investing
strategy.
Capital management
The Group's main objective when managing capital is to protect returns to
shareholders by ensuring the Group will trade profitably in the foreseeable
future. The Group also aims to maximise its capital structure of debt and
equity so as to minimise its cost of capital.
The Group manages its capital with regard to the risks inherent in the
business and the sector within which it operates by monitoring its gearing
ratio on a regular basis.
The Group considers its capital to include share capital, share premium, fair
value reserve and retained earnings. Net debt includes short and long-term
borrowings (including lease obligations) and shares classed as financial
liabilities, net of cash and cash equivalents. The Group has not made any
changes to its capital management during the year. The Group is not subject
to any externally imposed capital requirements.
An analysis of what the Group manages as capital is outlined below:
2021 2020
£'000 £'000
Total debt (3,468) (3,971)
Cash and cash equivalents 21,871 23,711
Net funds 18,403 19,740
Total equity (capital) 37,050 37,179
Net funds to capital ratio 49.7% 53.1%
Reconciliation of movement in net cash
Net cash at 1 January 2021 Other non- cash items Net cash
Repayment of borrowings at 31 December 2021
Cash flow
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 23,711 (1,840) - - 21,871
Borrowings (3,971) - 440 63 (3,468)
Total financial liabilities 19,740 (1,840) 440 63 18,403
Non-cash items of £63,000 relate to the increase in lease finance arising on
the purchase of property, plant and equipment.
16 Financial assets and liabilities - numerical disclosures
Analysis of financial assets by category:
31 December 2021 Amortised cost FVTPL Total
£'000 £'000 £'000
Financial assets
Trade and other receivables 8,874 - 8,874
Cash and cash equivalents 21,871 - 21,871
Total assets 30,745 - 30,745
Financial liabilities
Non-current borrowings 1,624 - 1,624
Current borrowings 1,844 - 1,844
Trade and other payables 3,379 - 3,379
Total liabilities 6,847 - 6,847
31 December 2020 Amortised cost FVTPL Total
£'000 £'000 £'000
Financial assets
Trade and other receivables 7,185 - 7,185
Cash and cash equivalents 23,711 - 23,711
Total assets 30,896 - 30,896
Financial liabilities
Non-current borrowings 2,131 - 2,131
Current borrowings 1,840 - 1,840
Trade and other payables 3,333 - 3,333
Total liabilities 7,304 - 7,304
Fair values
Assets held at fair value fall into three categories, depending on the
valuation techniques used, as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e., as prices) or
indirectly (i.e., derived from prices);
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
The Directors consider the carrying values of all financial assets and
liabilities to be a reasonable approximation of their fair values.
All other assets, and all liabilities are carried at amortised cost.
Maturity of financial liabilities
The maturity of borrowings (including right of use leases) carried at
amortised cost is as follows:
2021 2020
£'000 £'000
Less than six months 1,592 1,592
Six months to one year 252 248
One to two years 461 508
Two to five years 719 1,050
More than five years 444 573
3,468 3,971
The above borrowings are analysed on the balance sheet as follows:
2021 2020
£'000 £'000
Loans and other borrowings (current) 1,452 1,452
Leases (current) 392 388
Loans and other borrowings (non-current) 933 1,044
Leases (non-current) 691 1,087
3,468 3,971
Borrowings are secured on certain assets of the Group, and interest was
charged at rates of between 2.5% and 3.2% during the year. Including
interest that is expected to be paid, the maturity of borrowings (including
leases) is as follows:
2021 2020
£'000 £'000
Less than six months 1,637 1,639
Six months to one year 293 292
One to two years 536 590
Two to five years 839 1,229
More than five years 472 621
3,777 4,371
The above borrowings including interest that is expected to be paid are
analysed as follows:
2021 2020
£'000 £'000
Loans and other borrowings (current) 1,493 1,495
Leases (current) 437 436
Loans and other borrowings (non-current) 1,068 1,219
Leases (non-current) 779 1,221
3,777 4,371
The maturity of other financial liabilities, excluding loans and borrowings,
carried at amortised cost is as follows:
2021 2020
£'000 £'000
Less than six months 1,827 2,007
17 Deferred tax
Movements in deferred tax provisions are outlined below:
Accelerated tax depreciation Other
timing differences Re-valuations
Losses Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2021 (485) 10 (387) 473 (389)
Recognised in P&L during the year (193) 7 - 177 (9)
Recognised in equity during the year - - (140) - (140)
At 31 December 2021 (678) 17 (527) 650 (538)
Previous year movements were as follows:
Accelerated tax depreciation Other
timing differences Re-valuations
Losses Total
£'000 £'000 £'000 £'000 £'000
At 1 January 2020 (315) 44 (135) 240 (166)
Recognised in P&L during the year (170) (34) - 233 29
Recognised in equity - property revaluation - - (252) - (252)
At 31 December 2020 (485) 10 (387) 473 (389)
In addition, there are unrecognised net deferred tax assets as follows:
2021 2020
£'000 £'000
Tax losses carried forward 843 641
Excess of depreciation over capital allowances - -
Short term temporary differences - -
Net unrecognised deferred tax asset 843 641
Deferred tax assets and liabilities have been calculated using the rate of
corporation tax expected to apply when the relevant temporary differences
reverse of 25% (2020 - 19%). Deferred tax assets and liabilities are only
offset where there is a legally enforceable right of offset and there is an
intention to settle the balances net.
The unrecognised elements of the deferred tax assets have not been recognised
because there is insufficient evidence that they will be recovered because
such losses are within entities that are not expected to yield future profits.
The losses cannot be used to offset against profits in other entities as the
losses arose prior to 1 April 2017 and can therefore only be offset against
any profits made by the entity that incurred the loss.
18 Share capital
Authorised
2021 2021 2020 2020
Number £'000 Number £'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
2021 2021 2020 2020
Number £'000 Number £'000
Ordinary shares of £0.0000001 each 6,207,074 - 6,207,074 -
Deferred shares of £0.00000001 each 4,999,994,534,697 50 4,999,994,534,696 50
50 50
Treasury shares
During the year the Company acquired 3,500 (2020: 3,000) of its own Ordinary
shares for total consideration of £44,000 (2020: £39,000), and sold nil
(2020: 740,740) of its own Ordinary shares for total consideration of £nil
(2020: £9,682,000). These transactions brought the total number of Ordinary
shares held in treasury to 3,638,652 (2020: 3,635,152) with an aggregate
nominal value of less than £1. At the year end the total number of Ordinary
shares outstanding (excluding treasury shares) was 2,568,422 (2020:
2,571,922).
Rights attaching to deferred shares & A and B shares
The Deferred shares carry no rights to participate in the profits of the
Company and carry no voting rights. After the distribution of the first £10
billion in assets in the event of a return of capital (other than a purchase
by the Company of its own shares), the Deferred shares are entitled to an
amount equal to their nominal value.
The Company has no A and B shares in issue. These shares have conversion
rights allowing them to convert into Ordinary shares on a pre-determined
formula. All A and B shares previously in issue have been converted into
Ordinary shares.
19
Reserves
All movements on reserves are disclosed in the consolidated statement of
changes in equity.
The following describes the nature and purpose of each reserve within owners'
equity:
Reserve Nature and purpose
Share premium Amount subscribed for share capital in excess of nominal value
Revaluation reserves Cumulative net unrealised gains and short-term losses arising on the
revaluation of the Group's available for sale investments and freehold
property
Retained earnings Cumulative net gains and losses recognised in the statement of comprehensive
income, other than those included in revaluation reserves.
20 Related party transactions
Details of amounts payable to Directors, and parties related to the Directors,
are disclosed in note 4. There were no other transactions with key members
of management other than in respect of out-of-pocket expenses properly
incurred, and no other transactions with related parties.
21 Contingent liabilities
The Group had no material contingent liabilities as at the date of these
financial statements.
22 Non-controlling interests
The non-controlling interests of £2,402,000 (2020: £2,076,000 ) relate to
the net assets attributable to the shares not held by the Group at 31 December
2021 in the following subsidiaries:
2021 2020
Name of subsidiary £'000 £'000
NMT Group Limited 68 69
Shire Foods Limited 2,334 2,007
2,402 2,076
Summarised financial information (before intra-group eliminations) in respect
of those subsidiaries with material non-controlling interests is presented
below:
Shire Foods Limited
2021 2020
£'000 £'000
Non-current assets 8,081 8,737
Current assets 10,955 8,995
Non-current liabilities (1,615) (2,075)
Current liabilities (4,581) (4,668)
Provisions (1,150) (898)
Net assets (equity) 11,690 10,051
Group 9,356 8,044
Non-controlling interests 2,334 2,007
11,690 10,051
Revenue 30,775 27,189
Profit for the year after tax (stated after intra-group management
and interest charges) 1,778 1,382
Profit for the year attributable to non-controlling interests 354 274
- END -
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