REG - Volvere PLC - Preliminary Results <Origin Href="QuoteRef">VLE.L</Origin> - Part 2
27/05/2016 11:03
- Part 2: For the preceding part double click ID:nRSa4754Za
leases are charged to income on a
straight-line basis over the term of the relevant lease.
Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the
rates of exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing on the reporting
date. Gains and losses arising on retranslation are included in net profit or
loss for the period.
Retirement benefit costs
The Group's subsidiary undertakings operate defined contribution retirement
benefit schemes. Payments to these schemes are charged as an expense in the
period to which they relate. The assets of the schemes are held separately
from those of the relevant company and Group in independently administered
funds.
Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. The tax currently payable is based on taxable profit for the year.
Taxable profit differs from net profit as reported in the income statement
because it excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible.
Deferred tax is the tax expected to be payable or recoverable on temporary
differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are generally recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary difference arises from goodwill or from
the initial recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the tax profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is measured on an undiscounted basis using the tax rates that are
expected to apply in the period when the liability is settled or the asset is
realised. Deferred tax is charged or credited in the income statement, except
when it relates to items charged or credited directly to equity, in which case
the deferred tax is also dealt with in equity.
Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated
depreciation and any recognised impairment loss. Freehold property is
revalued on a periodic basis. Depreciation is charged so as to write off the
cost or valuation of assets, less their residual values, over their estimated
useful lives, using the straight line method, on the following bases:
Freehold property -
1.5% per annum
Improvements to short-term leasehold property - Over
the life of the lease
Plant and machinery -
4%-33% per annum
Investments
Investments are recognised and derecognised on a trade date where a purchase
or sale of an investment is under a contract whose terms require delivery of
the investment within the timeframe established by the market concerned, and
are initially measured at fair value, including transaction costs. Available
for sale current asset investments are carried at fair value with adjustments
recognised in other comprehensive income.
Investment income
Income from investments is included in the income statement at the point the
Group becomes legally entitled to it. Interest income and expenses are
reported on an accruals basis using the effective interest method.
Impairment of property, plant and equipment and intangible assets (including
goodwill)
At each reporting date the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and any risks specific
to the asset for which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised as an expense immediately, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but only so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment
loss been recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised as income immediately, unless
the relevant asset is carried at a revalued amount, in which case the reversal
of the impairment loss is treated as a revaluation increase.
Share-based payments
The Group issues equity-settled share-based payments to certain directors and
employees. Equity-settled share-based payments are measured at fair value at
the date of grant. The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line basis over
the vesting period, based on the Group's estimate of options that will
ultimately vest.
Fair value is measured by use of a Black-Scholes pricing model. The expected
life used in the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions and behavioural
considerations.
In determining the Group's share-based payment charge in 2014 arising in
respect of the shares issued to non-controlling interests (as set out in note
24), the Group evaluated the enterprise value of JMP (in 2015 treated as a
discontinued business). This evaluation considered the range of possible
earnings multiples that could apply on an exit to a business such as JMP, the
rights attaching to the shares issued, the proportion of the resulting equity
participation and the existence of a single large shareholder with significant
influence.
Inventories
Inventories are stated at the lower of cost and net realisable value. Raw
materials are valued at purchase price and the costs of ordinarily
interchangeable items are assigned using a weighted average cost formula. The
cost of finished goods comprises raw materials directly attributable to
manufacturing processes based on product specification and packaging cost.
Net realisable value is the estimated selling price in the ordinary course of
business less any applicable selling expenses.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, overnight deposits and
treasury deposits. The Group considers all highly liquid investments with
original maturity dates of three months or less to be cash equivalents.
Financial assets
The Group classifies its financial assets into one of the following
categories, depending on the purpose for which the asset was acquired. The
Group's accounting policy for each category is as follows:
Fair value through profit or loss (FVTPL): This category comprises only
in-the-money derivatives. They are carried in the statement of financial
position at fair value with changes in fair value recognised in the income
statement. The Group does not have any assets held for trading nor does it
voluntarily classify any financial assets as being at fair value through
profit or loss.
Loans and receivables: These assets are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. They
arise principally through the provision of goods and services to customers
(trade receivables), but also incorporate other types of contractual monetary
asset. They are initially recognised at fair value and subsequently carried
at amortised cost using the effective interest method less any provision for
impairment. Receivables are considered for impairment when there is a risk of
counterparty default.
Available-for-sale: Non-derivative financial assets not included in the above
categories are classified as available-for-sale and comprise the Group's
investments in entities not qualifying as subsidiaries, associates or jointly
controlled entities. They are carried at fair value with changes in fair
value recognised directly in equity (other comprehensive income). Fair value
is determined by reference to independent valuation statements provided by the
investment manager or broker (as the case may be) through whom such
investments are made. Where the underlying investments are exchange-traded,
the mid-price of the investment is used.
Impairment: All financial assets except those at FVTPL are reviewed for
impairment at each reporting date to identify whether there is any objective
evidence that a financial asset or group of assets is impaired. Different
methods are used to determine impairment as described above.
Financial liabilities
The Group classifies its financial liabilities into one of two categories,
depending on the purpose for which the liability was acquired. The Group's
accounting policy for each category is as follows:
FVTPL: This category comprises only out-of-the-money derivatives. They are
carried in the statement of financial position at fair value with changes in
fair value recognised in the income statement.
Other financial liabilities: Other financial liabilities include trade
payables and other short-term monetary liabilities, which are initially
recognised at fair value and subsequently carried at amortised cost using the
effective interest method.
Bank and other borrowings are initially recognised at the fair value of the
amount advanced net of any transaction costs directly attributable to the
issue of the instrument. Such interest bearing liabilities are subsequently
measured at amortised cost using the effective interest method. Interest
expense in this context includes initial transaction costs and premia payable
on redemption, as well as any interest or coupon payable while the liability
is outstanding.
Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Invoice discounting
The Group uses an invoice discounting facility and retains all significant
benefits and risks relating to the relevant trade receivables. The gross
amounts of the receivables are included within assets and a corresponding
liability in respect of proceeds received from the facility is included within
liabilities. The interest and charges are recognised as they accrue and are
included in the income statement with other interest charges.
Significant management judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and reported amounts of assets and
liabilities, income and expenses. The nature of the Group's business is such
that there can be unpredictable variation and uncertainty regarding its
business. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making the
judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
Significant management judgements
The judgements that have a significant impact on the carrying value of assets
and liabilities are discussed below:
Deferred tax asset
The Group recognises a deferred tax asset in respect of temporary differences
relating to capital allowances, revenue losses and other short term temporary
differences when it considers there is sufficient evidence that the asset will
be recovered against future taxable profits.
Current asset investments
Declines in the fair value of current asset investments are considered for
indicators of impairment. Where the decline in value is significant or
prolonged the asset may be considered to be impaired with the resulting
impairment losses recognised in the income statement. Short term and
insignificant declines in fair value that are considered to be temporary are
reflected in other comprehensive income.
Significant estimates
Information about estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and
expenses is provided below. Actual results may be substantially different.
Revenue recognition
Due to the nature of some services provided by certain of the Group's
businesses the recoverability of receivables can be subject to management
estimates. Whilst the Group has a thorough process for reviewing the
requirement for receivables and credit note provisions, this area is
inherently subjective.
Useful lives of depreciable assets
Management reviews its estimate of the useful lives of depreciable assets at
each reporting date, based on the expected utility of the assets.
Uncertainties in these estimates relate to technical obsolescence that may
change the utility of certain equipment used in the production of food.
Inventories
Management estimates the net realisable values of inventories, taking into
account the most reliable evidence available at each reporting date. The
future realisation of these inventories may be affected by market-driven
changes that may reduce future selling prices.
Consolidation
Management have concluded that is not appropriate to utilise the exemption
from consolidation available to investment entities under IFRS10. Accordingly
the consolidation includes all entities which the Company controls.
Business combinations
Management uses valuation techniques in determining the fair values of the
various elements of a business combination (see note 22).
Fair value measurement
Management uses valuation techniques to determine the fair value of financial
instruments (where active market quotes are not available) and non-financial
assets. This involves developing estimates and assumptions consistent with how
market participants would price the instrument. Management bases its
assumptions on observable data as far as possible but this is not always
available. In that case management uses the best information available.
Estimated fair values may vary from the actual prices that would be achieved
in an arm's length transaction at the reporting date.
New standards and interpretations - in issue but not yet effective
At the date of authorisation of these financial statements, certain new
standards, and amendments to existing standards have been published by the
IASB that are not yet effective, and have not been adopted early by the Group.
Information on those expected to be relevant to the Group's financial
statements is provided below.
Management anticipates that all relevant pronouncements will be adopted in the
Group's accounting policies for the first period beginning after the effective
date of the pronouncement. New standards, interpretations and amendments not
either adopted or listed below are not expected to have a material impact on
the Group's financial statements.
IFRS 9 'Financial Instruments' (2015)
The IASB recently released IFRS 9 'Financial Instruments' (2015), representing
the completion of its project to replace IAS 39 'Financial Instruments:
Recognition and Measurement'. The new standard introduces extensive changes to
IAS 39's guidance on the classification and measurement of financial assets
and introduces a new 'expected credit loss' model for the impairment of
financial assets. IFRS 9 also provides new guidance on the application of
hedge accounting.
IFRS 9 is effective for reporting periods beginning on or after 1 January
2018. The Group's management have not yet assessed the impact of IFRS 9 on the
consolidated financial statements.
IFRS 15 'Revenue from Contracts with Customers'
IFRS 15 presents new requirements for the recognition of revenue, replacing
IAS 18 'Revenue', IAS 11 'Construction Contracts', and several revenue-related
Interpretations. The new standard establishes a control-based revenue
recognition model and provides additional guidance in many areas not covered
in detail under existing IFRSs, including how to account for arrangements with
multiple performance obligations, variable pricing, customer refund rights,
supplier repurchase options, and other common complexities.
IFRS 15 is effective for reporting periods beginning on or after 1 January
2017. The Group's management have not yet assessed the impact of IFRS 15 on
the consolidated financial statements.
2 Operating profit
Operating profit is stated after charging/(crediting):
2015£'000 2014£'000(re-presented)
Staff costs 10,321 2,106
Depreciation of property, plant and equipment:
- owned assets 370 334
Amortisation of intangible assets 89 -
Operating lease expense 207 7
Audit fees 65 38
The analysis of audit fees is as follows:
- for the audit of the Company's annual accounts 19 15
- for the audit of the Company's subsidiaries' accounts 46 23
65 38
3 Staff costs
Staff costs comprise:
2015£'000 2014£'000
(re-presented)
Wages and salaries 9,036 1,919
Employer's National Insurance contributions 905 151
Defined contribution pension cost 380 36
10,321 2,106
The average number of employees (including Directors) in the Group was as
follows:
2015Number 2014Number(re-presented)
Engineering and production 266 76
Sales and marketing 11 8
Administration and management 40 18
317 102
4 Directors' remuneration
The remuneration of the directors was as follows:
Salaries & fees2015£'000 Otherbenefits2015£'000 Total2015£'000
David Buchler 58 - 58
Jonathan Lander 11 - 11
Nick Lander 11 1 12
80 1 81
Salaries & fees2014£'000 Otherbenefits2014£'000 Total2014£'000
David Buchler 30 - 30
Jonathan Lander 11 - 11
Nick Lander 11 1 12
52 1 53
The services of Jonathan Lander and Nick Lander are provided under the terms
of a Service Agreement with D2L Partners LLP. The amount due under these
agreements, which is in addition to the amounts disclosed above, for the year
amounted to £1,128,000 (2014: £551,000). The amount paid to David Buchler in
the year was paid to a third party on an invoice basis. The increase in
directors' remuneration reflects the performance of the Group for the year.
None of the directors were members of the Group's defined contribution pension
plan in the year (2014: none).
5 Operating segments
Analysis by business segment:
Automotive consulting2015£'000 Security solutions2015£'000 Investing and management services2015£'000 Food manufacturing2015£'000 Total continuing2015£'000 Discontinued2015£'000 Total 2015£'000
Revenue 12,077 311 - 15,476 27,864 12,823 40,687
Profit/(loss) before tax(1) 583 118 (946) 1,588 1,343 5,667(2) 7,010
Automotive consulting2014£'000 Security solutions2014£'000 Investing and management services2014£'000 Food manufacturing2014£'000 Total continuing2014£'000 Discontinued2014£'000 Total2014£'000
Revenue - 253 - 12,134 12,387 11,761 24,148
Profit/(loss) before tax(1) - 81 (534) 1,651(3) 1,198 273 1,471
Automotive consulting2015£'000 Security solutions2015£'000 Investing and management services2015£'000 Food manufacturing2015£'000 Total continuing2015£'000 Discontinued2015£'000 Total 2015£'000
Assets 5,095 148 16,277 10,163 31,683 - 31,683
Liabilities/provisions (2,600) (163) (339) (4,287) (7,389) - (7,389)
Net assets(4) 2,495 (15) 15,938 5,876 24,294 - 24,294
Automotive consulting2014£'000 Security solutions2014£'000 Investing and management services2014£'000 Food manufacturing2014£'000 Total continuing2014£'000 Discontinued2014£'000 Total 2014£'000
Assets - 33 11,932 9,553 21,518 4,526 26,044
Liabilities/provisions - (166) (256) (3,806) (4,228) (2,817) (7,045)
Net assets(4) - (133) 11,676 5,747 17,290 1,709 18,999
(1) stated before intra-group management and interest charges(2) discontinued segment result stated after tax(3) stated after an exceptional credit of £852,000(4) assets and liabilities stated excluding intra-group balances
Automotive consulting2015£'000 Security solutions2015£'000 Investing and management services2015£'000 Food manufacturing2015£'000 Total continuing2015£'000 Discontinued2015£'000 Total 2015£'000
Capital spend 25 1 1 821 848 108 956
Depreciation 26 - 1 343 370 91 461
Amortisation/impairment 89 - - - 89 - 89
Interest income (non-Group) - - 50 - 50 - 50
Interest expense (non-Group) 38 - - 134 172 - 172
Tax expense 58 - - 277 335 250(5) 585
Automotive consulting2014£'000 Security solutions2014£'000 Investing and management services2014£'000 Food manufacturing2014£'000 Total continuing2014£'000 Discontinued2014£'000 Total 2014£'000
Capital spend - - - 82 82 163 245
Depreciation - 1 7 326 334 82 416
Amortisation/impairment - - - - - - -
Interest income (non-Group) - - 50 - 50 - 50
Interest expense (non-Group) - - - 156 156 - 156
Tax expense - - - - - - -
(5) included in profit from discontinued operations after tax
Geographical analysis:
External revenue by location of customers Non-current assets by location of assets
2015 2014 2015 2014
£'000 £'000 £'000 £'000
(re-presented)
UK 25,039 11,937 6,224 5,361
Rest of Europe 1,761 446 - -
Other 1,064 4 - -
27,864 12,387 6,224 5,361
The Group had 2 (2014: 3) customers that individually accounted for in excess of 10% of the Group's continuing revenues as follows:
2015£'000 2014£'000
First customer 5,501 3,210
Second customer 3,672 2,775
Third customer - 2,659
6 Discontinued operations
The Group's stake in JMP Consultants Limited ("JMP"), which formed the Group's
transport planning and engineering segment, was sold on 18 December 2015 for
cash consideration of £8,506,000, of which the Group's share was £6,477,000.
In accordance with IFRS 5 the total profits relating to discontinued
activities for the year are presented on a single line on the income
statement, and are analysed below:
2015£'000 2014£'000
Revenue 12,823 11,761
Cost of sales (6,817) (6,387)
Administrative expensesInterestIncome tax expense (4,898)(11)(250) (4,924)--
Profits for the period to disposal/year 847 450
Non-controlling interests' share of losses in period to disposal (190) -
Group share of profitsProfit on disposal (see below) 6575,010 450-
Profit on discontinued operations - JMP Consultants LimitedLoss on discontinued operations - Interactive Prospect Management Limited(1) 5,667- 450(177)
Total profit on discontinued operations 5,667 273
Note 1:additional costs recognised in 2014 in respect of disposal in 2013. The net assets disposed, and resulting profit on sale is analysed below:
2015£'000
Property, plant and equipment 248
Work in progress 1,698
ReceivablesCash and cash equivalentsIncome tax expense 2,404833(3,256)
Net assets at date of disposal 1,927
Non-controlling interests' share of net assets at date of disposal (460)
Group share of net assets at date of disposalProfit on disposal 1,4675,010
Consideration 6,477
The consideration receivable is analysed as follows:
Received on date of disposal 5,693
Receivable following determination of net assets at disposal (included in other receivables at year-end) 385
Receivable one year after disposal (included in other receivables at year-end) 399
Total consideration receivable 6,477
The cash flows associated with the disposal are as follows:
Cash received on date of disposal 5,693
Cash disposed (833)
Net cash flows on disposal 4,860
7 Investment revenues, other gains and losses and finance income and
expense
2015 2014
£'000 £'000
Investment revenues 163 65
Other gains and losses 429 142
Finance income
Bank interest receivable 50 50
Finance expense
Bank interest (86) (64)
Finance lease interest 7 (15)
Other interest and finance charges (93) (77)
(172) (156)
Investment revenues and other gains and losses represent respectively interest
and dividends receivable from, and the gains arising upon disposal of,
investments made pursuant to the Group's investing and treasury management
policies.
8 Income tax
2015 2014
£'000 £'000
Current tax expense - -
Deferred tax expense recognised in income statement 335 -
Total tax expense recognised in income statement 335 -
Tax recognised directly in equity - -
Total tax recognised (continuing operations) 335 -
The reasons for the difference between the actual tax expense for the year and
the standard rate of corporation tax in the UK applied to profits for the year
are as follows:
2015£'000 2014£'000(re-presented)
Profit before tax 1,343 1,471
Expected tax charge based on the prevailing rate of corporation tax in the UK of 20.25% (2014: 21.5%) 272 316
Effects of: 49 75
Expenses not deductible for tax purposes
Income/gains not subject to tax (33) (197)
Depreciation for period (less than)/in excess of capital allowances - (16)
Short term timing differencesUnrecognised deferred tax assets -33 124
Utilisation of previously unrecognised losses - (194)
Effect of changes in rate of tax (33) -
Adjustments in respect of prior years 47 -
Total tax recognised (continuing operations) 335 -
9 Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings for the purposes of earnings per share: 2015£'000 2014£'000
From continuing operationsFrom discontinued operations 8325,667 796273
Total 6,499 1,069
EEaWeighted average number of shares for the purposes of earnings per share: 2015No. 2014No.
Weighted average number of ordinary shares in issue 4,091,547 4,175,676
Dilutive effect of potential ordinary shares - -
Weighted average number of ordinary shares for diluted EPS 4,091,547 4,175,676
There were no share options (or other dilutive instruments) in issue during
the year or the previous year.
10 Subsidiaries
The principal subsidiaries of Volvere plc, all of which have been included in
these consolidated financial statements, are as follows:
Name Country ofIncorporation PrincipalActivity Proportion of ownership interest in ordinary shares
Volvere Central Services Limited England and Wales Group support services 100%
NMT Group Limited Scotland Investment 98.6%
Sira Defence & Security LimitedShire Foods Limited England and WalesEngland and Wales Software publishingFood manufacturing 100%80%
Impetus Automotive LimitedImpetus Automotive Solutions Limited England and WalesEngland and Wales Automotive consultingInvestment 100%*100%
*as a subsidiary of Impetus Automotive Solutions Limited
11 Goodwill and other intangible assets
Goodwill£'000 Other intangible assets£'000 Total£'000
Cost
At 1 January 2014 and at 1 January 2015 - 441 441
Acquisitions 380 95 475
Additions - 65 65
At 31 December 2015 380 601 981
Amortisation and impairment charges
At 1 January 2014 and at 1 January 2015 - 441 441
Amortisation and impairment charge for the year - 89 89
At 31 December 2015 - 530 530
Net book value
At 31 December 2015 380 71 451
At 31 December 2014 - - -
Goodwill is that arising on the acquisition of Impetus Automotive Limited as
outlined in note 22.
As required by IAS 38 goodwill is not amortised and is instead tested annually
for impairment in the year following acquisition.
Other intangible assets comprise a mix of intellectual property rights and
software. The net book value of internally-generated intangible assets was
£71,000 (2014: nil).
12 Property, plant and equipment
Short LeaseholdProperty£'000 Freehold Plant & Machinery£'000 Total£'000
Property£'000
Cost
At 1 January 2014 85 2,430 3,646 6,161
Additions 54 - 191 245
Disposals (9) - (8) (17)
At 31 December 2014 and 1 January 2015 130 2,430 3,829 6,389
AcquisitionsAdditions 18092
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