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Volvere PLC - Final Results

Announcement: Fri 25th May, 2018 7:00am
RNS Number : 2653P
Volvere PLC
25 May 2018
 

 

25 May 2018

 

 

 

Volvere plc

 

("Volvere" or the "Company" and, together with its subsidiaries, the "Group")

 

Final results for the year ended 31 December 2017

 

Volvere plc (AIM: VLE), the growth and turnaround investment company, announces its final results for the year ended 31 December 2017.

 

Highlights

 

£ million except where stated

 

 

 

 

 

Year ended

Six months ended

 

 

31 December

2017

 

31 December

2016

 

30 June

(unaudited)

2017

Group revenue

43.4

33.0

18.5

 

Group profit before tax

 

3.5

 

2.0

 

0.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at 31
December 2017

 

As at 31
December 2016

As at
30 June 2017

(unaudited)

 

 

 

 

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

 

£6.59

 

£6.17

 

£6.23

 

 

 

 

Group net assets

26.1

26.6

26.9

 

 

 

 

Cash and marketable securities

18.5

20.0

20.5

 

 

 

 

 

·      Record group revenue and pre-tax profits for 2017 of £43.4 million (2016: £33.0 million) and £3.5 million (2016: £2.0 million) respectively.

 

·      Strong performance from Impetus Automotive, the group's automotive consultancy, which achieved revenue and profit before tax and intra-group management and interest charges(2) of £27.3 million (2016: £17.4 million) and £3.6 million (2016: £1.5 million) respectively.  Profit before tax was £3.3 million (2016: £1.1 million).

 

·      Satisfactory performance from Shire Foods, the group's food manufacturing business, which achieved revenue and profit before tax and intra-group management and interest charges(2) of £15.9 million (2016: £15.2 million) and £0.6 million (2016: £1.2 million) respectively.  Profit before tax for the year was £0.4 million (2016: £0.9 million).

 

·      Record net assets per share(1) of £6.59 with balance sheet remaining strong following £3.4 million share buy-back in October 2017.

 

 

Forward-looking statements:

This report may contain certain statements about the future outlook for Volvere plc.  Although the directors believe their expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

 

Note

1                      Based on the net assets attributable to owners of the parent company and the respective period end shares in issue of 3,668,363, 4,085,958 and 4,075,958.

2                      Profit before intra-group management and interest charges is considered to be a relevant and useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group.  Further information is included in the Chief Executive's statement and Financial review.

 

 

For further information:

Volvere plc

 

Jonathan Lander, CEO

Tel: +44 (0) 20 7634 9707

 

 

www.volvere.co.uk

 

N+1 Singer

Aubrey Powell/Liz Yong

 

Tel: + 44 (0) 20 7496 3000

 

 

 

 

Chairman's statement

 

I am pleased to report on the results for the year ended 31 December 2017.

 

The Group had another strong year with trading performance well ahead of the previous year and resulting in an increase in net assets per share* to £6.59 (2016: £6.17).  

 

We look forward to another encouraging year in 2018.

 

 

David Buchler

Chairman


24 May 2018

 

*Net assets attributable to owners of the parent company divided by total number of ordinary shares outstanding at the reporting date (less those held in treasury), see note 20.

 

 

 

Chief Executive's statement

 

Introduction

 

Progress in 2017 was very pleasing with Group revenue reaching a new record of £43.4 million (2016: £33.0 million) and pre-tax profits rising to £3.45 million in 2017 from £1.98 million in 2016.  Underpinning these results was a strong performance from Impetus Automotive and satisfactory performances from Shire Foods and Sira Defence & Security.

 

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 trading subsidiaries' activities during the year were automotive consulting, food manufacturing and security software solutions, and each of these is reported as a separate segment.

 

Operating review

 

The financial performance of each segment is summarised below and in the financial review below and further detailed in note 5 to the financial statements.

 

Automotive consulting                

 

Impetus Automotive Limited ("Impetus") was acquired in March 2015.  Impetus's activity is the provision of consulting and related services to the automotive sector, principally vehicle manufacturers and their national sales companies. The Group has an 83% stake in Impetus, and this was its second full year within the Group.

 

Revenue in 2017 grew to £27.3 million (2016: £17.4 million) and its profit before tax and intra-group management and interest charges was £3.6 million (2016: £1.5 million).  Profit before tax was £3.3 million (2016: £1.1 million).

 

Evolution in the automotive industry is continuing apace, with new vehicle technologies being rolled out and supply and support channels adapting to accommodate them.  We believe this will provide an exciting environment for Impetus as it supports its clients through these changes.  In the shorter term, there is some inevitable uncertainty as the industry faces a drop in sales in the UK due to UK-specific factors, whilst managing the transition towards a greater proportion of alternatively fuelled vehicles.  Whilst this could impact Impetus's revenue and margins, our experience to date has been that any such effects are modest and may in fact be offset by other opportunities. The automotive market is very large and we are of the view that the opportunities for Impetus remain significant.

 

Impetus is a people business, and our staff, who now number around 400, are fundamental in delivering our strategy - to be the customer's first choice consultant.  Our success is based on upon their hard work and dedication, and for that we are enormously grateful.  We look forward to another successful year in 2018.

 

Further information on Impetus's activities can be found at www.impetusautomotive.com.

 

Food manufacturing

 

Shire Foods Limited ("Shire"), in which the Group has an 80% stake, was acquired in 2011. Shire is a manufacturer of frozen pies, pasties and other pastry products for food retailers and food service customers.  

 

Shire's revenue for the year increased slightly to £15.87 million (2016: £15.19 million) but profit before tax and intra-group management and interest charges fell from £1.15 million in 2016 to £0.64 million this year.  Profit before tax for the year was £0.44 million (2016: £0.91 million).

 

The reduction in profitability compared to the prior year reflects the inflationary pressures on costs - both raw materials and labour - that continue to impact Shire.  The ability of the business to pass on such cost increases to customers, who themselves face extreme competition in the retail market, has been limited both in absolute terms and in terms of timing. The profit was also reduced by a one-off impairment charge of £0.19 million due to the accelerated write down of equipment that is being removed from service.

 

In spite of this, however, our innovations in recent years have enabled Shire to extend its ranges into different format products such as vegetarian parcels, mini pies and other party offerings.  In 2018 we are spending approximately £0.95 million on further capital equipment to allow these products to be made at higher margins.

 

Progress thus far in 2018 has been encouraging and we look forward to increasing both revenue and profitability for the year as a whole.

 

Further information about Shire can be found at www.shirefoods.com.

 

Security solutions

 

Sira Defence & Security Limited ("Sira"), the Group's digital CCTV viewing software business suffered a decline in performance with revenues down from £0.38 million to £0.28 million resulting in a fall in profits before tax and intra-group management and interest charges from £0.16 million to £0.05 million.  Profit before tax was £0.03 million (2016: £0.16 million).  The fall in revenue and profitability reflected lower client-funded development activity in the year.

 

Sira remains focused on being the universal interface for accessing multiple format CCTV footage in the law enforcement sector and we are investing in developing our partner-licensing model to increase scale.

 

Further information about Sira can be found at www.siraview.com.

 

Investing and management services

 

The Group's investment 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.  During the period we made modest revenues and other gains on our portfolio of £0.09 million (2016: £0.16 million).

 

Future strategy

 

We remain committed to seeking under-performing businesses that we believe we can build into attractive market-leading companies.   The Group's recent strong financial performance, coupled with the strength of its balance sheet, mean we will continue buying back the Group's shares when we consider to do so is in the interests of our shareholders.

 

 

 

Jonathan Lander

Chief Executive


24 May 2018

Financial review

 

Financial performance

 

Detailed information about the Group's segments is set out in note 5 to these financial statements which should be read in conjunction with this financial review and the Chairman's and Chief Executive's statements.

 

Overview

 

Group revenue grew by approximately 32% from £33 million in 2016 to £43.4 million in 2017.  Revenue growth was due mainly to the strong growth reported by Impetus Automotive Limited ("Impetus") whilst the Group's other businesses reported broadly consistent revenues.

 

Group profit before tax rose from £1.98 million to £3.45 million again driven by the excellent performance of Impetus, offset partly by lower profitability in Shire Foods Limited ("Shire") and Sira Defence & Security Limited ("Sira").

 

The trading performance of each of our businesses is outlined in the Chief Executive's statement and set out further in note 5 to the financial statements.

 

Automotive consulting

 

This segment reflects the trading of Impetus, which was acquired in March 2015.  

 

Revenue in 2017 grew to £27.3 million (2016: £17.4 million) and its profit before tax and intra-group management and interest charges was £3.6 million (2016: £1.5 million).  Profit before tax was £3.3 million (2016: £1.1 million).

 

The increase in revenue and profitability was a consequence of both the commencement of a large contract to manage the training services of a client, coupled with encouraging underlying growth in other areas.  The training services contract is subject to performance criteria that, if not achieved, can trigger contractual penalties. In the early stages of the contract no such sums were payable but it is possible that, as the contract matures, there may be some such payments, although these are not currently envisaged as being material.

 

The majority of Impetus's income is not subject to performance criteria and is affected more by the expansion or contraction (including continuation) of client activities.  During 2017 the company continued to grow with most of its major clients, the largest of which are the Volkswagen Group, Toyota, BMW and Jaguar Land Rover.

 

With strong underlying performance over the last two years, Impetus has been able to repay all Group debt that arose from the original acquisition (approximately £1.5 million) as well as follow-on working capital loans.  In addition, as of 31 December 2017, management fees and group interest paid to the Group since acquisition amount to approximately £1 million, along with dividends received in 2018 of £0.24 million.

 

Food manufacturing

 

This segment reflects the trading of Shire Foods, owned since July 2011.

 

Shire's revenue for the year increased slightly to £15.87 million (2016: £15.19 million) but profits before tax and intra-group management and interest charges dropped from £1.15 million in 2016 to £0.64 million in 2017.  As noted in the Chief Executive's statement, this was due to both a restricted ability to pass on cost increases to customers and increasing labour and raw material costs.

 

In recent months, however, there has been greater realism about the need to either increase consumer prices (or to appropriately reduce the quantity of product supplied for a given retail price) or to absorb cost increases from Shire.  However, as part of a balanced, partnering approach with clients, Shire will continue to seek volume growth through increasing the number of lines offered to individual clients and seek to minimise cost increases wherever possible.

 

Shire did not require any loans from the Group during 2017 (and no debt was outstanding at the start or end of the year).  Group management charges totalled £0.2 million in the period (2016: £0.2 million).  As noted above, Shire is investing approximately £0.95 million in new equipment in 2018, of which external debt funding is expected to finance approximately £0.85 million.

 

The 5-year financial performance of Shire is summarised in the table below:

 

 

Year ended 31 December

2017

£'000

Year ended 31 December

2016

£'000

Year ended 31 December

2015

£'000

Year ended 31 December

2014

£'000

Year ended 31

December

2013

£'000

 

 

 

 

 

 

Revenue

15,869

15,190

15,476

12,134

8,531

 

 

 

 

 

 

Profit/(loss) before tax, intra-group management and interest charges

635

1,149

1,588

1,651

117

 

 

 

 

 

 

Exceptional credit

-

-

-

(852)

-

 

 

 

 

 

 

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

 

635

 

1,149

 

1,588

 

799

 

117

 

Intra-group management and interest charges

               

(200)

 

(240)

 

(423)

 

-

 

-

 

Exceptional credit

 

-

 

-

 

-

 

852

 

-

 

________

________

________

________

________

 

Profit before tax

 

435

 

909

 

1,165

 

1,651

 

117

 

 

 

 

 

 

 

 

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

 

Whilst continuing to review and assess further investments in trading activities, the Group had significant cash on hand and has continued with active treasury management in response to prevailing low interest rates.  This strategy achieved investment revenues and other gains totalling £0.09 million (2016: £0.16 million).

 

The Group's net finance expense was £0.13 million (2016: £0.11 million).  Despite the Group's significant cash balances, individual Group trading companies utilise leverage where appropriate, and without recourse to the remainder of the Group.

 

Statement of financial position

 

Cash and current investments

 

Cash at the year end totalled £12.1 million (2016: £20.1 million) with a further £6.3 million invested in current asset investments.  Total cash and current investments fell by £1.7 million from £20.1 million in 2016 to £18.4 million in 2017. This was principally due to purchases of own shares in the year totalling £3.46 million, offset by trading cash flows.

 

Overall position

 

Total net assets fell slightly from £26.6 million to £26.1 million, again due principally to treasury share purchases.

 

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 417,595 (2016: nil) of its own shares (treasury shares) at a cost of £3.46 million (2016: nil).

 

Earnings per share

Basic and diluted earnings per ordinary share ("EPS") rose from 32.6p to 56.4p per share as a result of the strong trading performance and treasury share purchases.

 

 

 

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; in the automotive consulting segment staff utilisation, amounts billed to clients and cash collected are closely monitored; order intake is monitored monthly in respect of the security solutions segment.

 

Principal risk factors

 

The Company and Group face a number of specific business risks that could affect the Company's or Group's success.  The Company and Group invest in distressed businesses and securities, which by their nature often carry a higher degree of risk than those that are not distressed.  The Group's businesses are principally engaged in the provision of services that are dependent on the continued employment of the Group's employees and availability of suitable, profitable workload.  Also, in the automotive consulting and food manufacturing segments, there is a dependency on a small number of customers and a reduction in the volume or range of products or services supplied to those customers or the loss of any one of them could impact the Group materially.

 

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

 

More information on the Group's financial risks is disclosed in note 17 to the consolidated financial statements.

 

 

 

Nick Lander

Chief Financial & Operating Officer


24 May 2018

 

 

 

 

Consolidated income statement

 

 

 

 

 

 

 

Note

 

2017

2016

 

 

 

£'000

£'000
 

 

 

 

 

 

Revenue

5

 

43,418

32,964

Cost of sales

 

 

(33,693)

(25,033)

 

 

 

 

 

Gross profit

 

 

9,725

7,931

 

 

 

 

 

Distribution costs

 

 

(974)

(932)

Administrative expenses

 

 

(5,264)

(5,065)

 

 

 

 

 

Operating profit

2

 

3,487

1,934

 

 

 

 

 

Investment revenues

7

 

93

186

Other gains and losses

7

 

-

(22)

Finance expense

7

 

(164)

(162)

Finance income

7

 

38

48

 

 

 

 

 

Profit before tax

 

 

3,454

1,984

Income tax expense

8

 

(675)

(311)

 

 

 

 

 

Profit for the year

 

 

2,779

1,673

 

 

 

 

 

Attributable to:

 

 

 

 

- Equity holders of the parent

 

 

2,251

1,334

- Non-controlling interests

 

 

528

339

 

 

 

 

 

 

 

 

2,779

1,673

 

 

 

 

 

Earnings per share

9

 

 

 

 

 

 

 

 

- Basic

 

 

56.4p

32.6p

- Diluted

 

 

56.4p

32.6p

 

 

 

 

 


 

Consolidated statement of comprehensive income

 

 

 

 

2017

 

2016

 

 

 

£'000

£'000

 

 

 

 

 

Profit for the year

 

 

2,779    

1,673   

 

 

 

 

 

Other comprehensive income:

 

 

 

 

Fair value gains and losses on available for sale financial assets

 

 

 

 

- current period gains/(losses)

- reclassified to profit and loss

 

Revaluation of property

Deferred tax recognised on revaluation of property

 

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

 

 

 

77

-

 

260

(135)

 

(6)

-

617

 

-

-

 

25

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

196

642

 

 

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

 

2,975

2,315

 

 

 

 

 

Attributable to:

 

 

 

 

- Equity holders of the parent

 

 

2,423

1,976

- Non-controlling interests

 

 

552

339

 

 

 

 

 

 

 

 

2,975

2,315

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

 

 

 

Share

capital

£'000

Share

premium

£'000

 

Revaluation

reserves

£'000

Retained

earnings

£'000

Total

£'000


Non-controlling interests
£'000

Total

£'000

2017

 

 

 

 

 

 

 

Other comprehensive income

-

-

177

(5)

172

24

196

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

2,251

2,251

528

2,779

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

-

177

2,246

2,423

552

2,975


Balance at 1 January

50

3,640

-

21,529

25,219

1,406

26,625

 

 

 

 

 

 

 

 

 

Transactions with owners:

 

 

 

 

 

 

 

 

Purchase of own shares

-

-

-

(3,458)

(3,458)

-

(3,458)

 

 

 

 

 

 

 

 

Share based payments

-

-

-

2

2

-

2

 

 

 

 

 

 

 

 

Total transactions with owners

-

-

-

(3,456)

(3,456)

-

(3,456)

 

 

 

 

 

 

 

 

Balance at 31 December

50

3,640

177

20,319

24,186

1,958

26,144

 

 

 

 

 

 

 

 

 

 

Share

capital

£'000

Share

premium

£'000

 

Revaluation

reserve

£'000

Retained

earnings

£'000

Total

£'000


Non-controlling interests
£'000

Total

£'000

 

 

 

 

 

 

 

 

2016

 

 

 

 

 

 

 

Other comprehensive income

-

-

-

25

25

-

25

 

 

 

 

 

 

 

 

Transfer to profit and loss on disposal

-

-

617

-

617

-

617


Profit for the year

-

-

-

1,334

1,334

339

1,673

 

 

 

 

 

 

 

 

Total comprehensive income for the year

 

-

-

617

1,359

1,976

339

2,315


Balance at 1 January

50

3,640

(617)

20,175

23,248

1,046

24,294

 

 

 

 

 

 

 

 

 

Transactions with owners:

 

 

 

 

 

 

 

 

Increase in non-controlling interest

-

-

-

(12)

(12)

21

9

 

 

 

 

 

 

 

 

Share based payments

-

-

-

7

7

-

7

 

 

 

 

 

 

 

 

Total transactions with owners

-

-

-

(5)

(5)

21

16

 

 

 

 

 

 

 

 

Balance at 31 December

50

3,640

-

21,529

25,219

1,406

26,625

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of financial position

 

Company number 04478674

 

 

 

 

 

 

2017

2016

 

Note

 

£'000

£'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Goodwill

11

 

380

380

Other intangible assets

11

 

8

39

Property, plant and equipment

12

 

5,424

5,572

 

 

 

 

 

Total non-current assets

 

 

5,812

5,991

 

 

 

 

 

Current assets

 

 

 

 

Inventories

13

 

1,466

2,082

Trade and other receivables

15

 

10,104

7,231

Cash and cash equivalents

 

 

12,119

20,063

Available for sale investments

14

 

6,335

-

 

 

 

 

 

Total current assets

 

 

30,024

29,376

 

 

 

 

 

Total assets

 

 

35,836

35,367

 

 

 

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Loans and other borrowings

18

 

(783)

(1,613)

Finance leases

18

 

(192)

(159)

Trade and other payables

16

 

(6,023)

(4,431)

Tax payable

 

 

(433)

(184)

 

 

 

 

 

Total current liabilities

 

 

(7,431)

(6,387)

 

 

 

 

 

Non-current liabilities

 

 

 

 

Loans and other borrowings

18

 

(1,353)

(1,448)

Finance leases

18

 

(315)

(442)

 

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

(1,668)

(1,890)

 

 

 

 

 

Total liabilities

 

Provisions - deferred tax

19

 

(9,099)

 

(514)

(8,277)

 

(376)

Provisions - lease incentive

 

 

(79)

(89)

 

 

 

 

 

Net assets

 

 

26,144

26,625

 

 

 

 

 

Equity

 

 

 

 

Share capital

20

 

50

50

Share premium account

21

 

3,640

3,640

Revaluation reserves

21

 

177

-

Retained earnings

 

 

20,319

21,529

 

 

 

 

 

Capital and reserves attributable to equity holders of the Company

 

 

24,186

25,219

Non-controlling interests

26

 

1,958

1,406

 

 

 

 

 

Total equity

 

 

26,144

26,625

 

 

 

 

 

 

 

 

Consolidated statement of cash flows

 

 

 

 

2017

2017

2016

2016

 

Note

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Profit for the year

 

 

2,779

 

1,673

 

Adjustments for:

 

 

 

 

 

Investment revenues

7

(93)

 

(186)

 

Other gains and losses

7

-

 

22

 

Finance expense

7

164

 

162

 

Finance income

7

(38)

 

(48)

 

Depreciation

12

664

 

436

 

Amortisation of intangible assets

11

31

 

32

 

Foreign exchange differences

 

7

 

(7)

 

Loss on disposal of property, plant and equipment

Income tax expense

 

7

675

 

62

311

 

Share based payment expense

 

2

 

7

 

 

 

 

 

 

 

 

 

 

1,419

 

791

 

 

 

 

 

 

Operating cash flows before movements in working capital

 

 

4,198

 

2,464

 

 

 

 

 

 

(Increase)/decrease in trade and other receivables

 

 

(2,873)

 

100

Increase in trade and other payables

 

 

1,582

 

275

Decrease/(increase) in inventories

 

 

616

 

(976)

Tax paid

 

 

(422)

 

(82)

 

 

 

 

 

 

Cash generated from operations

 

 

3,101

 

1,781

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Proceeds from sale of discontinued operations net of cash sold

6

-

 

784

 

Purchase of available for sale investments

 

(6,258)

 

-

 

Income from available for sale investments

 

93

 

186

 

Disposal of available for sale investments

 

-

 

4,908

 

Purchase of property, plant and equipment

12

(190)

 

(164)

 

Disposal of property, plant and equipment

 

-

 

25

 

Interest received

7

38

 

49

 

 

 

 

 

 

 

Net cash (used by)/generated from investing activities

 

 

(6,317)

 

5,788

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Interest paid

 

(164)

 

(162)

 

Purchase of own shares (treasury shares)

20

(3,458)

 

-

 

Net (repayment of)/new borrowings

 

(1,093)

 

620

 

Issue of shares (by subsidiary)

 

-

 

9

 

 

 

 

 

 

 

Net cash (used)/generated by financing activities

 

 

(4,715)

 

467

 

 

 

 

 

 

Net (decrease)/increase in cash

 

 

(7,931)

 

8,036

Cash at beginning of year

 

 

20,063

 

11,967

Foreign exchange movement

 

 

(13)

 

60

 

 

 

 

 

 

Cash at end of year

 

 

12,119

 

20,063

 

 

 

 

 

 

 

 

 

 

 

Notes forming part of the preliminary announcement

 

 

The financial information set out above, which was approved by the Board on 24 May 2018, is derived from the full Group accounts for the year ended 31 December 2017 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 2017, 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

30 May 2018 and will be available from the Company's registered office at Warnford Court, 29 Throgmorton Street, London, EC2N 2AT and online at www.volvere.co.uk.

 

1      Accounting policies

 

Basis of accounting

 

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS and IFRIC interpretations) as adopted by the European Union ("adopted IFRS") and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under adopted IFRS.  The Company has elected to prepare its Parent Company financial statements in accordance with Financial Reporting Standard 101 ("FRS 101"); these are presented below.

Going concern
 

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out above.  In addition, note 17 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.


The Group has considerable financial resources and operates in a number of different market sectors. As a consequence, the directors believe that the Group is well placed to manage the business risks inherent in its activities despite the current uncertain economic outlook.

 

The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

 

The following principal accounting policies have been applied consistently, in all material respects, in the preparation of these financial statements:

           

Basis of consolidation

 

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year.  Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.  All subsidiaries have a reporting date of 31 December.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.  All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests, presented as part of equity, represent the portion of a subsidiary's profit or loss and net assets that is not held by the Group. The Group attributes total comprehensive income or loss of subsidiaries between the owners of the parent and the non-controlling interests based on their respective ownership interests.

 

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 (ie gain on a bargain purchase) is recognised in profit or loss immediately.

The purchase of a non-controlling interest is not a business combination within the scope of IFRS 3, since the acquiree is already controlled by its parent.  Such transactions are accounted for as equity transactions, as they are transactions with equity holders acting in their capacity as such. No change in goodwill is recognised and no gain or loss is recognised in profit or loss.

 

Goodwill

Goodwill represents the future economic benefits arising from a business combination that are not individually identified and separately recognised. See above for information on how goodwill is initially determined. Goodwill is carried at cost less accumulated impairment losses and is reviewed annually for impairment.

Other intangible assets 

All other intangible assets are accounted for using the cost model whereby capitalised costs are amortised on a straight-line basis as set out below over their estimated useful lives, which are considered finite.  Registered design rights are amortised over the life of the registration. Residual values and useful lives are reviewed at each reporting date and they are subject to impairment testing where indicators of impairment are present. 

Intellectual property rights                       - 10% straight line

Software                                                  - 33% straight line

 

When an intangible asset is disposed of, the gain or loss on disposal is determined as the difference between the proceeds and the carrying amount of the asset, and is recognised in profit or loss within other income or other expenses.

 

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes. 

 

Sale of goods is recognised when the Group has transferred to the buyer the significant risks and rewards of ownership, generally when the customer has taken undisputed delivery of the goods. There are no service obligations attached to the sale of goods.  Customer rebates are deducted from revenue.

 

Revenue earned on time and materials contracts is recognised as costs are incurred.  Income from fixed price contracts is recognised in proportion to the stage of completion, determined on the basis of work done, of the relevant contract.

Revenue from consulting services is recognised when the services are provided by reference to the contract's stage of completion at the reporting date. When the outcome can be assessed reliably, contract revenue and associated costs are recognised by reference to the stage of completion of the contract activity at the reporting date. When the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs that have been incurred and are recoverable. Contract costs are recognised in the period in which they are incurred or, where recoverable from clients, are included in work-in-progress.

Revenue from consulting services relating to fixed price contracts is recognised on a straight-line basis over the course of the contract as this is considered to best represent the manner in which the right to consideration is earned. Penalties for non-performance against specific terms of the contract are provided for when there is a probable outflow of resources under the contract terms and the amount can be reliably estimated.  Such adjustments are deducted from revenue.

 

Revenue from software licences is recognised either upfront (where the grant of the licence is at inception of a contract and where maintenance is provided as a separate service) or periodically in line with the time for which the licence is provided (where such provision is part of an ongoing managed service).

 

If it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately in profit or loss.

 

The gross amount due from customers for contract work is presented within trade and other receivables for all contracts in progress for which costs incurred plus recognised profits (less recognised losses) exceeds progress billings. The gross amount due to customers for contract work is presented within other liabilities for all contracts in progress for which progress billings exceed costs incurred plus recognised profits (less recognised losses).

 

Discontinued operations

Discontinued operations represent cash generating units or groups of cash generating units that have either been disposed of or classified as held for sale, and represent a separate major line of business or are part of a single co-ordinated plan to dispose of a separate major line of business.  Cash generating units forming part of a single co-ordinated plan to dispose of a separate major line of business are classified within continuing operations until they meet the criteria to be held for sale.  The post-tax profit or loss of the discontinued operation is presented as a single line on the face of the consolidated income statement, together with any post-tax gain or loss recognised on the re-measurement to fair value less costs to sell or on the disposal of the assets or disposal group constituting the discontinued operation.  On changes to the composition of groups of units comprising discontinued operations, the presentation of discontinued operations within prior periods is restated to reflect consistent classification of discontinued operations across all periods presented.

 

Operating segments

IFRS 8 "Operating Segments" requires the disclosure of segmental information for the Group on the basis of information reported internally to the chief operating decision-maker for decision-making purposes.  The Group considers that the role of chief operating decision-maker is performed collectively by the Board of Directors.

 

Volvere plc is a holding company that identifies and invests principally in undervalued and distressed businesses and securities as well as businesses that are complementary to existing Group companies.  Its customers are based primarily in the UK, Europe and the USA.

 

Financial information (including revenue and 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.

 

 

 

Leasing

 

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease.  The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.  Lease payments are apportioned between finance charges and the reduction of lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.  Finance charges are charged directly against income. 

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

Foreign currencies

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing on the dates of the transactions.  At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting date.  Gains and losses arising on retranslation are included in net profit or loss for the period.

 

Retirement benefit costs

The Group's subsidiary undertakings operate defined contribution retirement benefit schemes.  Payments to these schemes are charged as an expense in the period to which they relate.  The assets of the schemes are held separately from those of the relevant company and Group in independently administered funds.


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.

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). On disposal, amounts recognised in other comprehensive income are transferred to the profit and loss as part of the gain or loss on disposal.  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 (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 is not appropriate to utilise the exemption from consolidation available to investment entities under IFRS10 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.

 

Revenue recognition

 

Management makes judgements against the terms of fixed price contracts and whether they could result in penalties relating to non-performance against specific terms. This relates to £4.6 million of revenue (2016: £4.0 million).

 

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.

 

Revenue recognition

 

Management is required to determine any adjustments to revenue for non-performance against terms of fixed price contracts.  There is sensitivity in this adjustment as the penalties are set at various percentages according to performance achieved or considered to have been achieved.

 

Receivables

 

Due to the nature of some services provided by certain businesses within the Group the recoverability of receivables can be subject to management estimates.  Management estimation is required in measuring and recognising provisions and otherwise determining the exposure to unrecoverable debts. Sensitivity is limited through the Group's credit control procedures and the overall high quality of the Group's customer base, although it is acknowledged that some customer concentration can mean that adjustments could be material.

 

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 have 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 takes 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.

 

New standards and interpretations - in issue but not yet effective

 

A number of new standards are effective for annual periods beginning after 1 January 2017 and earlier application is permitted.  However, the Group has not adopted early the new or amended standards in preparing these consolidated financial statements.

 

The following standards are not expected to have a material impact on the Group's financial statements in the period of initial application.

  

IFRS 9 'Financial Instruments' (2016)

 

The IASB recently released IFRS 9 'Financial Instruments' (2016), representing the completion of its project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. The new standard introduces extensive changes to IAS 39's guidance on the classification and measurement of financial assets and introduces a new 'expected credit loss' model for the impairment of financial assets. IFRS 9 also provides new guidance on the application of hedge accounting.

 

The Group is required to adopt IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' from 1 January 2018.

 

IFRS 9 'Financial Instruments' sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 'Financial Instruments: Recognition and Measurement'.

 

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 'Revenue', IAS 11 'Construction Contracts' and IFRIC 13 'Customer Loyalty Programmes'.

 

The Group has performed initial assessments on the estimated impact that the initial application of IFRS 9 and IFRS 15 will have on its consolidated financial statements but has not yet completed its detailed assessment. The estimated impact of the adoption of these standards on the Group's equity as at 1 January 2018 is based on these initial assessments and is not expected to be material.

 

IFRS 16 'Leases'

IFRS 16 replaces existing leases guidance, including IAS 17 'Leases', IFRIC 4 'Determining whether an Arrangement contains a Lease', SIC-15 'Operating Leases - Incentives' and SIC-27 'Evaluating the Substance of Transactions Involving the Legal Form of a Lease'.

 

The standard is effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted for entities that apply IFRS 15 at or before the date of initial application of IFRS 16.

 

IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognises a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard - i.e. lessors continue to classify leases as finance or operating leases.

 

The Group has completed an initial assessment of the potential impact on its consolidated financial statements but has not yet completed its detailed assessment. The actual impact of applying IFRS 16 on the financial statements in the period of initial application will depend on future economic conditions, including the Group's borrowing rate at 1 January 2019, the composition of the Group's lease portfolio at that date, the Group's latest assessment of whether it will exercise any lease renewal options and the extent to which the Group chooses to use practical expedients and recognition exemptions.

 

So far, the most significant impact identified is that the Group will recognise new assets and liabilities for its operating leases of plant and machinery (principally in respect of vehicles) and one property.  As at 31 December 2017, the Group's future minimum lease payments under non-cancellable operating leases amounted to £2.06 million, on an undiscounted basis (see Note 22).

 

In addition, the nature of expenses related to those leases will now change as IFRS 16 replaces the straight-line operating lease expense with a depreciation charge for right-of-use assets and interest expense on lease liabilities.

 

No significant impact is expected for the Group's finance leases.

 

2      Operating profit

 

Operating profit is stated after charging/(crediting):

 

2017

£'000

2016

£'000

 

 

 

Staff costs

18,494

13,451

Depreciation of property, plant and equipment

664

436

Amortisation of intangible assets

31

32

Operating lease expense

975

309

 

 

 

Auditor's fees - audit services

62

58

Auditor's fees - tax advice

-

14

 

 

 

The analysis of audit fees is as follows:

 

 

- for the audit of the Company's annual accounts

23

16

- for the audit of the Company's subsidiaries' accounts

43

42

 

 

 

 

66

58

 

 

 

 

3      Staff costs

 

Staff costs comprise:

 


2017

£'000


2016

£'000

 

 

 

Wages and salaries                    

16,001

11,811

Employer's National Insurance contributions

1,869

1,218

Defined contribution pension cost

622

415

Share based payment expense

2

7

 

 

 

 

18,494

13,451

 

 

 

 

 

 

The average number of employees (including Directors) in the Group was as follows:

 

 

2017

Number

2016

Number

 

 

 

Engineering, production and professional

413

284

Sales and marketing

7

8

Administration and management

44

43

 

 

 

 

464

335

 

 

 

 

4      Directors' remuneration


The remuneration of the directors was as follows:

 

Salaries & fees

2017

£'000

Other

benefits

2017

£'000

 

Total

2017

£'000

 

 

 

 

David Buchler

30

-

30

Jonathan Lander

11

-

11

Nick Lander

11

1

12

 

 

 

 

 

52

1

53

 

 

 

 

 

 

Salaries & fees

2016

£'000

Other

benefits

2016

£'000

 

Total

2016

£'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 (which is controlled by them and is therefore a related party).  The amount due under these agreements, which is in addition to the amounts disclosed above, for the year amounted to £528,000 (2016: £615,000). Amounts owed to D2L Partners LLP at the year end totalled £nil (2016: £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 no amounts were outstanding at the year end (2016: £nil). None of the directors were members of the Group's defined contribution pension plan in the year (2016: none).

 

5      Operating segments

 

Analysis by business segment:

 

An analysis of key financial data by business segment is provided below.  The Group's automotive consulting and security solutions segments are engaged in the provision of services to third party customers.  The group's food manufacturing segment 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 Review and the Financial Review above.

 

 

 

2017

 

Automotive consulting

2017

£'000

 

Security solutions

2017

£'000

 

Food manufacturing

2017

£'000

Investing and management services

2017

£'000

 

 

Total

2017

£'000

 

 

Revenue

 

27,265

 

284

 

15,869

 

-

 

43,418

 

 

 

 

 

 

 

 

Profit/(loss) before tax(1)

3,604

47

635

(832)

3,454

 

 

 

 

 

 

 

 

 

2016

 

 

Automotive consulting

2016

£'000

 

 

Security solutions

2016

£'000

 

 

Food manufacturing

2016

£'000

 

Investing and management services

2016

£'000

 

 

 

Total

2016

£'000

 

 

 

 

 

 

 

 

 

Revenue

 

17,372

 

382

 

15,190

 

20

 

32,964

 

 

 

 

 

 

 

 

Profit/(loss) before tax(1)

 

1,485

 

163

 

1,149

 

(813)

 

1,984

 

 

 

 

 

 

 

 

 

2017

 

Automotive consulting

2017

£'000

 

Security solutions

2017

£'000

 

Food manufacturing

2017

£'000

Investing and management services

2017

£'000

 

 

Total

2017

£'000

 

 

 

 

 

 

 

 

Assets

8,305

247

10,819

16,465

35,836

 

Liabilities/provisions

(4,593)

(215)

(4,640)

(244)

(9,692)

 

 

 

 

 

 

 

 

Net assets(2)

3,712

32

6,179

16,221

26,144

 

 

 

 

 

 

 

 

 

2016

 

 

Automotive consulting

2016

£'000

 

 

Security solutions

2016

£'000

 

 

Food manufacturing

2016

£'000

 

Investing and management services

2016

£'000

 

 

 

Total

2016

£'000

 

 

 

 

 

 

 

 

Assets

4,834

207

11,136

19,190

35,367

 

Liabilities/provisions

(2,895)

(209)

(5,412)

(226)

(8,742)

 

 

 

 

 

 

 

 

Net assets(2)

1,939

(2)

5,724

18,964

26,625

 

 

 

 

 

 

 

 

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

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

 

 

2017

 

 

Automotive consulting

2017

£'000

 

 

Security solutions

2017

£'000

 

 

Food manufacturing

2017

£'000

 

Investing and management services

2017

£'000

 

 

 

Total

2017

£'000

 

 

 

 

 

 

Capital spend

34

6

223

-

263

Depreciation

48

3

613

-

664

Amortisation/impairment

30

-

1

-

31

Interest income (non-Group)

-

-

-

38

38

Interest expense (non-Group)

44

-

120

-

164

Tax expense

650

-

25

-

675

 

 

 

 

 

 

 

 

 

2016

 

 

Automotive consulting

2016

£'000

 

 

Security solutions

2016

£'000

 

 

Food manufacturing

2016

£'000

 

Investing and management services

2016

£'000

 

 

 

Total

2016

£'000

 

 

 

 

 

 

Capital spend

35

-

287

-

322

Depreciation

45

-

390

1

436

Amortisation/

impairment

 

32

 

-

 

-

 

-

 

32

Interest income (non-Group)

-

-

-

48

48

Interest expense (non-Group)

41

-

121

-

162

Tax expense

175

-

136

-

311

 

 

 

 

 

 

 

 

Geographical analysis:

 

 

External revenue by

location of customers

Non-current assets by

location of assets

 

2017

2016

2017

2016

 

£'000

£'000

£'000

£'000

 

 

 

 

 

UK

38,550

29,064

5,812

5,991

Rest of Europe

3,403

2,612

-

-

Other

1,465

1,288

-

-

 

 

 

 

 

 

43,418

32,964

5,812

5,991

 

 

 

 

 

 

The Group had 2 (2016: 3) customers that individually accounted for in excess of 10% of the Group's continuing revenues as follows:

 

 

2017

£'000

2016

£'000

 

 

 

First customer (automotive solutions segment)

11,621

3,697

Second customer (food manufacturing segment)

6,671

6,713

 

 

 

 

6      Discontinued operations

 

Cash received in 2016 in respect of discontinued activities consisted of the final payment in respect of the disposal of the Group's stake in JMP Consultants Limited ("JMP") which was sold on 18 December 2015 for cash consideration of £8,506,000, of which the Group's share was £6,477,000.

 

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

 

 

 2017

2016

 

£'000

£'000

 

 

 

Investment revenues

93

186

 

 

 

Other gains and losses

-

(22)

 

 

 

Finance income

 

 

Bank interest receivable

38

49

 

 

 

Finance expense

 

 

Bank interest

(58)

(64)

Finance lease interest

(23)

(19)

Other interest and finance charges

(83)

(79)

 

 

 

 

(164)

(162)

 

 

 

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

 

 

2017

2016

 

£'000

£'000

 

 

 

Current tax expense - current year

Current tax expense - adjustments in respect of prior years

707

(35)

271

-

 

 

 

Deferred tax expense recognised in income statement - current year

Deferred tax expense recognised in income statement - adjustments in respect of prior years

 (25)

28

105

(65)

 

 

 

Total tax expense recognised in income statement

675

311

Tax recognised directly in equity

135

-

 

 

 

Total tax recognised

810

311

 

 

 

 

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:

 

 

2017

£'000

2016

£'000

 

 

 

Profit before tax

3,454

1,984

 

 

 

Expected tax charge based on the prevailing rate of corporation tax in the UK of 19.25% (2016: 20%)

665

397

 

Effects of:


Expenses not deductible for tax purposes

 

 

 

41

 

 

 

51

Income/gains not subject to tax

(18)

(37)

Deferred tax not recognised

(8)

1

Effect of changes in rate of tax

3

(36)

Adjustments in respect of prior years

(8)

(65)

 

 

 

Total tax recognised in income statement

675

311

 

 

 

 

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 19.

 

Factors that may affect the future tax charge

 

Reductions in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17% (effective 1 April 2020) was substantively enacted on 6 September 2016. This will reduce the company's future current tax charge accordingly. The deferred tax liability at 31 December 2017 has been calculated based on these rates.

 

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:

2017   

£'000   

2016

£'000

 

 

Profit attributable to equity holders of the parent company:

 

2,251   

 

1,334

 

 

 

 

 

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

 

 

2017

No.    

 

2016

No.

 

Weighted average number of ordinary shares in issue

 

3,987,670    

 

4,085,958

 

Dilutive effect of potential ordinary shares

-    

-

 

 

 

 

 

Weighted average number of ordinary shares for diluted EPS

3,987,670   

4,085,958

 

 

 

 

 

         

 

There were no share options (or other dilutive instruments) in issue during the year or the previous year in respect of the parent company's shares.

 

 

 

10    Subsidiaries

 

The subsidiaries of Volvere plc, all of which have been included in these consolidated financial statements, are as follows:

           

 

 

Name

 

Registered address

 

 

Principal

Activity

Proportion of ownership interest in ordinary shares

 

Volvere Central Services Limited

Note 1

Group support services

100%

NMT Group Limited

Note 2

Investment

98.6%

Sira Defence & Security Limited

Shire Foods Limited

Note 1

Note 1

Software publishing

Food manufacturing

100%

80%

Impetus Automotive Limited

Impetus Automotive Solutions Limited

Impetus Automotive GmbH

Note 3

Note 1

Note 4

Automotive consulting

Holding company

Automotive consulting

Note 7

100%

Note 7

Impetus Automotive Consulting Services (Beijing) Co., Ltd

Note 5

Automotive consulting

100%

  Impetus Automotive Pty Limited

Note 6

Automotive consulting

100%

New Medical Technology Limited

Zero-Stik Limited

Note 2

Note 2

Dormant

Dormant

98.6%

98.6%

 

Note 1 -   Registered at Shire House, Tachbrook Road, Leamington Spa, Warwickshire, CV31 3SF, England.

Note 2 -   Registered at c/o Wright, Johnston & Mackenzie LLP, 302 St Vincent St, Glasgow, G2 5RZ, Scotland.

Note 3 -   Registered at Tournament Court, Edgehill Drive, Warwick, CV34 6LG, England.

Note 4 -   Registered at Bismarckstraβe 30, 64668 Rimbach, Germany.

Note 5 -   Registered at Office No 1562 NCI Tower, 12a Jianguomenwai Avenue, 100022 Beijing,China.

Note 6 -   Registered at 75 Wensleydale Drive, Mornington, Victoria 3931, Australia.

Note 7 -   The Group owns 100% of the A ordinary shares and none of the B ordinary shares of Impetus Automotive Limited, which at the date of these financial statements gives an economic interest in the total equity of approximately 83%.  Impetus Automotive Limited owns 100% of Impetus Automotive GmbH, Impetus Automotive Consulting Services (Beijing) Co., Ltd and Impetus Automotive Pty Limited.

 

11    Goodwill and other intangible assets                          

 

 

 

Goodwill

£'000

Other intangible assets

£'000

 

 

Total

£'000

Cost

 

 

 

 

At 1 January 2016, 1 January 2017 and 31 December 2017

380

601

981

 

 

 

 

Amortisation

 

 

 

 

At 1 January 2016                                                                                                   

-

530

530

Charge for 2016

Charge for 2017

-

-

32

31

32

31

 

 

 

 

At 31 December 2017

-

593

593

 

 

 

 

Net book value

 

At 31 December 2017

380

8

388

 

 

 

 

At 31 December 2016

380

39

419

 

 

 

 

 

Goodwill is that arising on the acquisition of Impetus Automotive Limited in 2015.

 

As required by IAS 38 goodwill is not amortised and is instead tested annually for impairment.  The business unit to which the goodwill attaches generated profits (before tax and intra-group management and interest charges) of over £3m and the carrying value of the goodwill is £380,000.  Impairment testing therefore readily indicates that there is no impairment in the carrying value of goodwill, even if extremely conservative assumptions are used.

 

Other intangible assets comprise a mix of intellectual property rights and software.  The net book value of internally-generated intangible assets was £8,000 (2016: £39,000).

 

 

 

12    Property, plant and equipment                                   

 

Short Leasehold

Property

£'000

 

Freehold
Property

£'000

 

Plant & Machinery

£'000

 

 

Total

£'000

Cost or valuation

 

 

 

 

 

At 1 January 2016

180

2,430

4,640

7,250

Additions

-

-

322

322

Disposals

-

-

(322)

(322)

 

 

 

 

 

At 31 December 2016 and 1 January 2017

180

2,430

4,640

7,250

 

Additions

 

-

 

-

 

263

 

263

Revaluation

-

120

-

120

Disposals

-

-

(14)

(14)

 

 

 

 

 

 

 

 

 

 

At 31 December 2017

180

2,550

4,889

7,619

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

At 1 January 2016

63

95

1,319

1,477

Disposals

-

-

(235)

(235)

Charge for the year

12

22

402

436

 

 

 

 

 

At 31 December 2016 and 1 January 2017

 

Disposals

75

 

-

117

 

-

1,486

 

(7)

1,678

 

(7)

Reversed on revaluation

-

(140)

-

(140)

Charge for the year

12

23

629

664

 

 

 

 

 

At 31 December 2017

87

-

2,108

2,195

 

 

 

 

 

Net book value

 

 

 

 

 

 

 

 

 

At 31 December 2017

93

2,550

2,781

5,424

 

 

 

 

 

At 31 December 2016

105

2,313

3,154

5,572

 

 

 

 

 

 

Freehold property was revalued by an independent valuation specialist to £2,550,000 as at  5 December 2017, resulting in an unrealised revaluation gain of £260,000 which has been recognised in other comprehensive income. Under the cost model, the carrying value of freehold property would be £2,290,000.  All other property, plant and equipment is carried at cost less accumulated depreciation.

 

The net book value of property, plant and equipment held on finance leases was £748,000 (2016: £779,000). 

 

Management consider 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 subsidiaries) with a net book value of £5.42 million is pledged as collateral for Group borrowings (all of which are within subsidiaries).

 

13    Inventories

 

 

2017

£'000

 

2016

£'000

 

Raw materials                                 

Finished products

472

994

754

1,328

 

 

 

 

1,466

2,082

 

 

 

 

The total amount of inventories consumed in the year and charged to cost of sales was £12.35 million (2016: £9.21 million).

 

14    Financial assets (current)                                                                                           

 

2017

£'000

 

2016

£'000

Available-for-sale investments

6,335

                -

 

 

 

During the year the Group invested in equity securities pursuant to its treasury management policies.  The investments are carried at fair value as stated above.  The historic cost of investments held at the balance sheet date was £6,258,000 (2016: £nil).

 

15    Trade and other receivables

 

2017

£'000

2016

£'000

 

 

 

Trade receivables

9,108

6,512

Less: provision for impairment of trade receivables

-

(1)

 

 

 

Net trade receivables

9,108

6,511

Other receivables

301

271

Amounts recoverable on contracts

395

218

Prepayments and accrued income

300

231

 

 

 

 

10,104

7,231

 

 

 

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:

 

2017

£'000

2016

£'000

 

 

 

Trade receivables

3,676

6,431

Borrowings

(687)

(1,521)

 

 

 

 

2,989

4,910

 

 

 

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 automotive consulting and food manufacturing segments.  Both segments have a relatively large number of customers, however there is a significant dependency on a small number of large customers who can and do place significant contracts.  Provisions for bad and doubtful debts are made based on management's assessment of the risk taking into account the ageing profile, experience and circumstances.  There were no significant amounts due from individual customers where the credit risk was considered by the Directors to be significantly higher than the total population.

 

There is no significant currency risk associated with trade receivables as the vast majority are denominated in Sterling.

 

The ageing analysis of trade receivables is disclosed below:

 

2017

£'000

2016

£'000

 

 

 

Up to 3 months

8,936

6,431

3 to 6 months

172

80

6 to 12 months

-

-

Over 12 months

-

1

 

 

 

 

9,108

6,512

 

 

 

 

16    Trade and other payables (current)

 

2017

£'000

2016

£'000

 

 

 

Trade payables

1,964

1,723

Other tax and social security

1,337

759

Other payables

101

108

Accruals

1,991

1,214

Deferred income

630

627

 

 

 

 

6,023

4,431

 

 

 

 

The fair value of all trade and other payables approximates to book value at 31 December 2017 and at 31 December 2016.

 

17    Financial instruments - risk management

 

The Group's principal financial instruments are:

 

·      Trade receivables

·      Cash at bank

·      Current asset investments

·      Loans and finance leases

·      Trade and other payables

 

The Group is exposed through its operations to one or more of the following financial risks:

 

·      Cash flow interest rate risk

·      Foreign currency risk

·      Liquidity risk

·      Credit risk

·      Other market price risk

 

Policy for managing these risks is set by the Board following recommendations from the Chief Financial & Operating Officer.  Certain risks are managed centrally, while others are managed locally following guidelines communicated from the centre.  The policy for each of the above risks is described in more detail below.

 

Interest rate risk

 

Due to the relatively low level of borrowings, the Directors do not have an explicit policy for managing cash flow interest rate risk.  All current and recent borrowing has been on variable terms, with interest rates of between 3% and 4% above base rate, and the Group has cash reserves sufficient to repay all borrowings promptly in the event of a significant increase in market interest rates.  All cash is managed centrally and subsidiary operations are not permitted to arrange borrowing independently.

 

The Group's investments may attract interest at fixed or variable rates, or none at all.  The market price of such investments may be impacted positively or negatively by changes in underlying interest rates.  It is not considered relevant to provide a sensitivity analysis on the effect of changing interest rates since, at the year end, 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; they are of the opinion that as the Group's trading exposure is limited to transactions with a small number of customers and suppliers it is not appropriate to actively hedge that element of its foreign currency exposure, nor is its exposure to foreign currency risk considered to be significant.

 

Liquidity risk

 

The Group maintains significant cash reserves and therefore does not require facilities with financial institutions to provide working capital.  Surplus cash is managed centrally to maximise the returns on deposits. 

 

Credit risk

 

The Group is mainly exposed to credit risk from credit sales.  The Group's policy for managing and exposure to credit risk is disclosed in note 17.

 

Other market price risk

 

The Group has generated a significant amount of cash and this has been held partly as cash deposits and partly invested pursuant to the Group's investing strategy.  Investments were made in 2017 in equity funds, which reflect the Group's need to access capital.  The presence of these investments expose the Group to market price risk. The directors believe that the exposure to market price risk from this activity is acceptable in the Group's circumstances, as they seek to balance the competing priorities of risk management and return maximisation.

 

Capital management

 

The Group's main objective when managing capital is to protect returns to shareholders by ensuring the Group will continue to trade profitably in the foreseeable future.  The Group also aims to maximise its capital structure of debt and equity so as to minimise its cost of capital.

 

The Group manages its capital with regard to the risks inherent in the business and the sector within which it operates by monitoring its gearing ratio on a regular basis.

 

The Group considers its capital to include share capital, share premium, revaluation reserve and retained earnings.  Net debt includes short and long-term borrowings (including lease obligations) and shares classed as financial liabilities, net of cash and cash equivalents.  The Group has not made any changes to its capital management during the year.  The Group is not subject to any externally imposed capital requirements.

 

An analysis of what the Group manages as capital is outlined below:

 

 

2017

£'000

2016

£'000

 

 

 

Total debt

(2,643)

(3,662)

Add cash and cash equivalents

12,119

20,063

 

 

 

Net funds

9,476

16,401

 

 

 

Total equity (capital)

26,144

26,625

 

 

 

Net funds to capital ratio

36.2%

61.6%

 

 

 

 

Reconciliation of Movement in Net Cash

 

 

Net cash at 1 January 2017

 

 

 

Cash flow

 

Repayment of borrowings

 

 

Other non-cash items

 

Net cash at 31 December 2017

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

Cash at bank and in hand

20,063

(7,944)

-

-

12,119

Borrowings

(3,662)

-

1,093

(74)

(2,643)

 

 

 

 

 

 

 

16,401

(7,944)

1,093

(74)

9,476

 

 

 

 

 

 

 

18    Financial assets and liabilities - numerical disclosures

 

Analysis of financial assets by category:

 

 

2017

£'000

2016

£'000

Non-financial items carried at fair value

 

 

Freehold property

2,550

2,430  

 

 

 

Financial instruments carried at fair value

 

 

Available for sale investments

6,335

-  

 

 

 

Assets carried at amortised cost

 

 

Loans and receivables

10,105

7,000  

Cash and cash equivalents

12,119

20,063  

 

 

 

Total financial assets and non-financial assets carried at fair value

31,109

29,493  

 

 

 

 

 

 

Liabilities carried at amortised cost

 

 

 

Trade and other payables

3,402

2,590  

Borrowings

2,643

3,662  

 

 

 

Total financial liabilities

6,045

6,252  

 

 

 

 

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. 

 

Available for sale investments fall under Level 1 in the IFRS7 fair value hierarchy.  Freehold property falls under Level 3.  Freehold property was valued by an independent qualified person as at 5 December 2017 using RICS guidelines on an open market value basis.   

 

All other assets, and all liabilities are carried at amortised cost. 

 

Maturity of financial assets

 

The maturities and denominations of financial assets at the year end, other than cash and cash equivalents, and loans and receivables (note 15 above) are as follows:

 

2017

£'000

2016

£'000

Sterling

 

 

No fixed maturity

6,335

-

 

 

 

 

Maturity of financial liabilities 

 

The maturity of borrowings (including finance leases) carried at amortised cost is as follows:

 

 

2017

£'000

2016

£'000

 

 

 

Less than six months

831

1,647

Six months to one year

144

125

One to two years

283

259

Two to five years

456

588

More than five years

929

1,043

 

 

 

 

2,643

3,662

 

 

 

The above borrowings are analysed on the balance sheet as follows:

 

 

2017

£'000

2016

£'000

 

 

 

Loans and other borrowings (current)

783

1,613

Finance leases (current)

192

159

Loans and other borrowings (non-current)

1,353

1,448

Finance leases (non-current)

315

442

 

 

 

 

2,643

3,662

 

 

 

 

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 finance leases) is as follows:

 

 

2017

£'000

2016

£'000

 

 

 

Less than six months

870

1,690

Six months to one year

181

165

One to two years

348

331

Two to five years

586

742

More than five years

1,064

1,218

 

 

 

 

3,049

4,146

 

 

 

The above borrowings including interest that is expected to be paid are analysed as follows:

 

 

2017

£'000

2016

£'000

 

 

 

Loans and other borrowings (current)

839

1,674

Finance leases (current)

212

182

Loans and other borrowings (non-current)

1,664

1,814

Finance leases (non-current)

334

476

 

 

 

 

3,049

4,146

 

 

 

 

Maturity of financial liabilities 

 

The maturity of other financial liabilities, excluding loans and borrowings, carried at amortised cost is as follows:

 

2017

£'000

2016

£'000

 

Less than six months

3,733

2,590

 

 

 

 

19    Deferred tax

 

Movements in deferred tax provisions are outlined below:

 

 

Accelerated tax depreciation

Other

timing differences

 

Re-valuations

 

 

Total

 

£'000

£'000

£'000

£'000

 

 

 

 

 

At 1 January 2017

(385)

9

-

(376)

Recognised in P&L during the year

(1)

(2)

-

(3)

Recognised in OCI during the year

-

-

(135)

(135)

 

 

 

 

 

At 31 December 2017

(386)

7

(135)

(514)

 

 

 

 

 

 

Previous year movements were as follows:

 

Accelerated tax depreciation

Other

timing differences

 

 

Losses

 

 

Total

 

£'000

£'000

£'000

£'000

 

 

 

 

 

At 1 January 2016

(432)

(36)

133

(335)

Recognised in P&L during the year

47

45

(133)

(41)

 

 

 

 

 

At 31 December 2016

(385)

9

-

(376)

 

 

 

 

 

 

 

 

 

In addition, there are unrecognised net deferred tax assets as follows:

 

2017

£'000

2016

£'000

 

 

 

Tax losses carried forward

595

583

Excess of depreciation over capital allowances

4

3

Short term temporary differences

11

8

 

 

 

Net unrecognised deferred tax asset

610

594

 

 

 


Deferred tax assets and liabilities have been calculated using the rate of corporation tax expected to apply when the relevant temporary differences reverse.  Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net.

 

The unrecognised 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 sufficient future profits.

 

20    Share capital

 

 

Authorised

 

2017

Number

2017

£'000

2016

Number

2016

£'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

 

2017

Number

2017

£'000

2016

Number

2016

£'000

 

 

 

 

 

Ordinary shares of £0.0000001 each

6,207,074

-

6,207,074

-

Deferred shares of £0.00000001 each

4,999,994,534,696

50

4,999,994,534,696

50

 

 

 

 

 

 

 

           

 

           

 

 

50

 

50

 

 

 

 

 

 

Treasury shares

 

During the year the Company acquired 417,595 (2016: nil) of its own Ordinary shares for total consideration of £3,458,000 (2016: nil). This brought the total number of Ordinary shares held in treasury to 2,538,711 with an aggregate nominal value of less than £1.

 

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.

 

21    Reserves                                                                                                                                                                   

All movements on reserves are disclosed in the consolidated statement of changes in equity.

 

 

 

The following describes the nature and purpose of each reserve within owners' equity:

 

Reserve

Nature and purpose

 

 

Share premium

Amount subscribed for share capital in excess of nominal value

 

 

Revaluation 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.

 

22    Operating leases

 

The Group has one lease for a property occupied by a subsidiary, and various leases in respect of plant and machinery. The property lease is of the tenant repairing type with a rent review due in 2020 and it ends during 2025.  The total future values of minimum lease payments are due as follows:

                                                                                                                              

 

Land and buildings

2017

£'000

 

Other

2017

£'000

Land and buildings

2016

£'000

 

Other

2016

£'000

 

 

 

 

 

Not later than one year

144

891

144

269

Later than one year and not later than five years

552

114

552

166

Later than five years

363

-

499

-

 

 

 

 

 

 

1,059

1,005

1,195

435

 

 

 

 

 

 

23    Share-based payments

 

The Company has previously operated two share-based payment schemes, an approved EMI equity-settled share-based remuneration scheme for certain employees and an unapproved equity-settled share scheme for certain management.  All options issued have now either lapsed or been exercised, such that there are no options in issue as at 31 December 2017 (2016: nil).  All options in issue were fully vested prior to 1 January 2016, hence there is no share based payment charge in 2017 or 2016, in respect of share options issued by the company.

 

During the previous year certain employees purchased a newly-issued class of shares in one of the company's subsidiaries.  The rights attaching to this new class of shares vest on a number of criteria over a 2 year period following issue, including that they require employees to continue in employment.  The shares issued have restricted rights, and the company that issued the shares has first option to repurchase them in certain scenarios.

 

This gave rise to a share-based payments charge in the income statement of £2,000 (2016: £7,000) based on an independent valuation exercise prepared for the company.  Detailed disclosures regarding the share-based payments charge have not been included in the financial statements as the amounts involved are immaterial.

 

24    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, and no other transactions with related parties.

 

25    Contingent liabilities

 

The Group had no material contingent liabilities as at the date of these financial statements.

 

 

 

26    Non-controlling interests

 

The non-controlling interests of £1,958,000 (2016: £1,406,000 ) relate to the net assets attributable to the shares not held by the Group at 31 December 2017 in the following subsidiaries:

 

 

Name of subsidiary

2017

£'000

2016

£'000

 

 

 

NMT Group Limited

72

74

Impetus Automotive Limited

652

205

Shire Foods Limited

1,234

1,127

 

 

 

 

1,958

1,406

 

 

 

 

Summarised financial information (before intra-group eliminations) in respect of those subsidiaries with material non-controlling interests is presented below.                                                                                                                         

       

 

 

 

Impetus Automotive Limited

 

 

Shire Foods Limited

 

2017

£'000

2016

£'000

 

2017

£'000

2016

£'000

 

Non-current assets

Current assets

Non-current liabilities

Current liabilities

163

8,141

-

(4,586)

209

4,624

-

(3,726)

5,264

5,556

(1,668)

(2,458)

5,401

5,735

(1,890)

(3,221)

 

Provisions

(79)

(87)

(514)

(379)

 

 

 

 

 

 

 

Net assets (equity)

3,639

1,020

6,180

5,646

 

 

 

 

 

 

 

 

                 

 

Attributable to:

 

 

Group

2,988

815

4,946

4,519

Non-controlling interests

651

205

1,234

1,127

 

 

 

 

 

 

3,639

1,020

6,180

5,646

 

 

 

 

 

 

Revenue

27,266  

17,372  

15,869

15,190

 

 

 

 

 

Profit for the year after tax (stated after intra-group management

and interest charges)

 

2,620

 

942

 

410

 

773

 

 

 

 

 

Profit for the year attributable to non-controlling interests

447

184

82

155

 

 

 

 

 

 

27    Events after the balance sheet date

 

There have been no significant events warranting disclosure in these financial statements.

 

 

-ENDS-


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
FR LLFVAEIISFIT



 
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