REG - Volvere PLC - Half-year Report
-
27 September 2018
Volvere plc
("Volvere" or the "Group")
Interim Results for the six months ended 30 June 2018
Volvere plc (AIM: VLE), the growth and turnaround investment company, announces its unaudited Interim Results for the six months ended 30 June 2018.
Highlights
£ million except where stated
Six months ended
Year ended
30 June
2018
30 June
2017
31 December
2017
Group revenue
22.2
18.5
43.4
Group profit before tax
1.28
0.76
3.5
As at
30 June 2018As at
30 June 2017As at 31
December 2017Consolidated net assets per share
(excluding non-controlling interests)(1)
£6.75
£6.23
£6.59
Group net assets
26.9
26.9
26.1
Cash and marketable securities
20.4
20.5
18.5
· Impetus Automotive again delivered a strong performance. Profit before tax and intra-group management and interest charges(2) was £1.92 million (30 June 2017: £1.54 million) on revenue of £14.82 million (30 June 2017: £12.16 million). Profit before tax was £1.79 million (30 June 2017: £1.37 million) - with the difference being intra-group management and interest charges.
· Shire Foods' performance improved slightly over the comparable prior period and was in line with expectations. Loss before tax and intra-group management and interest charges(2) was £0.17 million (30 June 2017: £0.24 million) on revenue of £7.25 million (30 June 2017: £6.28 million). Loss before tax was £0.19 million (30 June 2017: £0.25 million) - with the difference being intra-group management and interest charges.
· Record net assets per share(1) of £6.75.
· Balance sheet remains strong with high liquidity. Cash and marketable securities in line with prior comparable period at £20.4 million, in spite of the impact of the £3.4 million share buy-back in October 2017 and an increase of £2.0 million against £18.5 million as at 31 December 2017.
Forward-looking statements:
This report may contain certain statements about the future outlook for Volvere plc. Although the directors believe their expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.
Note
1 Based on the net assets attributable to owners of the parent company and the respective period end shares in issue (which were 3,668,363 at 30 June 2018, 4,075,958 at 30 June 2017 and 3,668,363 at 31 December 2017).
2 Profit before intra-group management and interest charges is considered to be a relevant and useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group. Further information is included in the Chief Executive's statement and Financial review.
For further information:
Volvere plc
Jonathan Lander, CEO
Tel: +44 (0) 20 7634 9707
N+1 Singer
Aubrey Powell/Lauren Kettle/Iqra Amin
Tel: + 44 (0) 20 7496 3000
Chairman's Statement
I'm delighted to report an excellent set of results for the first half of 2018. Impetus Automotive performed strongly, with the performance of Shire Foods in line with our expectations. Net assets per share have reached a new record of £6.75* (30 June 2017: £6.23, 31 December 2017: £6.59). We are confident about the outlook for our businesses for the remainder of 2018.
David Buchler
Chairman
27 September 2018
*Net assets attributable to owners of the parent company divided by total number of ordinary shares outstanding at the reporting date
(less those held in treasury) - see note 7.
Chief Executive's Statement
The Group achieved record revenues and profits during the first half of 2018. Total revenue reached £22.2 million (30 June 2017: £18.54 million) and profit before tax was £1.28 million (30 June 2017: £0.76 million).
This excellent performance was principally as a result of a very strong performance by Impetus, our automotive consulting business. Shire and SDS met our expectations for the period, with both performing better than in the same period in 2017. The performance of each of the Group's segments is set out below.
Automotive Consulting
Impetus Automotive Limited ("Impetus"), which was acquired in March 2015, is approximately 83%-owned by the Group. Impetus's activity is the provision of consulting and related services to the automotive sector, principally vehicle manufacturers and their national sales companies. The company employs approximately 420 people. Its largest clients are Volkswagen Group, Toyota, BMW and Jaguar Land Rover.
For the 6 months to 30 June 2018 revenues and profit before tax and intra-Group interest and management charges** were £14.82 million and £1.92 million respectively (30 June 2017: £12.16 million, profit £1.54 million; year to 31 December 2017: £27.27 million, profit £3.60 million). Profit before tax was £1.79 million (30 June 2017: £1.37 million, year to 31 December 2017: £3.27 million) - with the difference being intra-group interest and management charges.
When we acquired Impetus 3½ years ago, the company employed 200 staff and revenues were approximately £15m. Since then, the revenues and workforce have doubled. This performance reflects the hard work by our staff and management team in building profitable, sustainable work streams with clients. We have been notably successful in winning new business in providing training services and recently won a second contract with another large automotive manufacturer. We cannot expect, however, that the company will maintain in the short term the same significant growth rate it has shown to date, when there is some uncertainty in the sector - and particularly in the UK because of Brexit. However, the sheer size of the automotive market - and our strength in the aftersales, research, training and fleet sales segments in particular - is such that we believe that there is plenty of room for Impetus to grow in the future and to continue to prosper.
Food manufacturing
This segment comprises Shire Foods Limited ("Shire"), the Group's 80%-owned frozen pie and pasty manufacturing business, which was acquired in 2011. The company employs approximately 140 people and is based in Leamington Spa, United Kingdom.
First-half revenues reached £7.25 million and there was a loss before tax and intra-Group management and interest charges** of £0.17 million (30 June 2017: £6.28 million and £0.24 million; 31 December 2017 £15.87 million, profit £0.64 million). Loss before tax was £0.19 million (30 June 2017: £0.25 million, 31 December 2017: profit £0.44 million) - with the difference being intra-group interest and management charges. Given that Shire's revenues are weighted towards the colder winter months we expect that its performance will improve in the second half of the year.
Shire's revenues in the period were the highest they have been during the Group's ownership, for what is the seasonally slower part of the year. However, gross margins have reduced over the last few years because of the rise in factory wages and raw material price increases, exacerbated by the effects of Sterling depreciation and the lower availability of labour after the Brexit vote in June 2016. In order to strengthen Shire's operational performance through margin enhancement and capacity growth, as well as to facilitate new product development, we have committed in 2018 to capital investment totalling £0.95 million. The introduction of this new equipment is largely complete and we should see the benefits of it increasingly in future months.
Security solutions
Sira Defence and Security Limited ("SDS"), our security solutions business delivered a satisfactory performance, with revenue of £0.12 million (30 June 2017: £0.1 million, 31 December 2017: £0.28 million). The company achieved a breakeven result before tax (30 June 2017: loss £0.03 million, year to 31 December 2017: profit £0.47 million).
We signed a number of licencing agreements in the period where our software is embedded in much larger systems. These agreements generally have a minimum revenue guarantee together with a performance-based component. The sales lead times into public sector clients remain long, but we expect some of these agreements to generate further revenues for us this year or in early 2019.
Further segmental information is set out in the financial review below and in note 2.
Purchase of own shares
The Group has not acquired any further shares for treasury since the large share buy-back in October 2017. As of 30 June 2018, since the start of its buyback programme, the Group has returned £9.4 million to shareholders.
Acquisitions and future strategy
Although through the first half of 2018 deal flow has remained steady, we did not identify any opportunities which we deemed worthy of investment. We have seen a greater number of under-performing or failing businesses in the retail and casual dining sectors where there remains over-capacity and cost pressures.
Our current businesses could be affected by turmoil in the lead up to, and following, Brexit. However, in the case of Impetus, we believe there is the opportunity to prosper within a dynamic automotive environment and prospects of further growth. In the case of Shire, we are taking steps to minimise any disruption to our supply chain but we are dependent on our supply chain doing the same. Volvere may perhaps, on balance, be one of the very few businesses to benefit from Brexit-led distress, provided it does not endure too long. We will of course assess any opportunities as they arise.
The loyalty and hard work of all the Group's employees is what generates our performance and our basis for growth. I am very grateful to all of them and look forward to delivering a strong second half to 2018.
Jonathan Lander
Chief Executive
27 September 2018
**Profit before intra-Group management and interest charges is considered to be a relevant and useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group.
Financial Review
This financial review covers the Group's performance during the period ended 30 June 2018. It should be read in conjunction with the Chairman's and Chief Executive's Statements.
Overview
Group revenue for the period grew by approximately 20% to £22.20 million from £18.54 million in the prior comparable period (31 December 2017: £43.42 million). The increase of £3.66 million arose from growth in both Impetus and Shire Foods, as explained below.
Group profit before tax was £1.28 million (30 June 2017: £0.76 million, year to 31 December 2017: £3.45 million). The increase, against the comparable period last year, reflects an increase in profit at Impetus, reduced losses at Shire Foods and a breakeven result in SDS which was previously loss-making.
Further comment on each segment is set out below and detailed information about the Group's segments is set out in note 3 to these interim results, which should be read in conjunction with this financial review.
Automotive Consulting
Impetus has been a member of the Group since March 2015. A summary of its recent financial performance is set out in Table A below.
Table A
6 months to
30 June
2018
6 months to
30 June
2017
Year ended
31 December
2017
Year ended
31 December
2016
Year ended
31 December
2015(1)
£000
£000
£000
£000
£000
Revenue
14,824
12,163
27,265
17,372
12,077
Profit before tax, Group interest and management charges(2)
1,921
1,536
3,604
1,485
583
Profit before tax(2)
1,789
1,369
3,270
1,114
304
(1) Reflects the period from acquisition on 25 March 2015 to 31 December 2015
(2) The difference between profit before tax and profit before tax, Group interest and management charges relates to Group interest and management charges
At the start of the second quarter of 2017 Impetus commenced managing the training and development centre for a large client. Since 1 September 2018, Impetus has taken management responsibility for a second manufacturer's smaller training academy and look forward to continuing to focus on, and growing further, in this important area.
Revenue growth against the comparable period in 2017 is due principally to the full-period contribution of the training and development centre contract, which has also had a corresponding effect on underlying profitability.
During the period the Group charged Impetus £0.13 million for management services but no interest was payable in view of the repayment during 2017 of all Group loans. At the end of June 2017, Group loans outstanding had amounted to £1.24 million.
Impetus declared dividends totalling £0.29 million during the first half of 2018, of which the Group's share was £0.24 million. The Group owns approximately 83% of Impetus.
Food manufacturing
A summary of Shire's recent financial performance is set out in Table B below.
Table B
6 months to
30 June
2018
£'000
6 months to
30 June
2017
£'000
Year ended 31 December
2017
£'000
Year ended 31 December
2016
£'000
Year ended 31 December
2015
£'000
Revenue
7,252
6,280
15,869
15,190
15,476
(Loss)/profit before tax, intra-group management and interest charges
(173)
(237)
635
1,149
1,588
Intra-group management and interest charges
(15)
(15)
(200)
(240)
(423)
Profit before tax
(188)
(252)
435
909
1,165
Shire's revenue grew by more than 15% compared to the same period in 2017. However, the upward pressure on raw material prices (principally as a result of Sterling's weakness), coupled with the pressure from customers to avoid increasing selling prices, has reduced gross margins. We continue to believe that, over time, with the uncertainty surrounding Brexit reduced, the company will see a return to a more normal trading environment.
In the meantime, we have committed to investing almost £1 million in Shire to increase capacity and reduce wastage. The investments themselves are not a panacea for improving performance, but rather provide greater flexibility to manufacture different product formats, to increase throughput and to drive process improvements which, in turn, will reduce wastage and increase margins.
At 30 June 2018, there were no outstanding Group loans. However, given the cashflows associated with the procurement of the aforementioned capital expenditure pending lease refinancing, we expect to make further loans to Shire during the final quarter of 2018. The equity investment and related intellectual property investments made of £0.53 million and £0.44 million respectively, brings the Group's total amount invested (excluding loans) to date to £0.97 million.
Shire's unaudited net assets at the period end amounted to £5.99 million (30 June 2017: £5.39 million; 31 December 2017: £6.18 million), of which 20% is attributable to non-controlling interests.
Investment revenues and other gains and losses and finance income and expense
The Group disposed of available-for-sale investments during the period as part of its treasury management policy for total consideration of £3.21 million. Investment revenues arising amounted to £0.08 million (30 June 2017: £nil million, 31 December 2017: £0.09 million).
The Group's net finance expense was £0.04 million (30 June 2017: £0.05 million, 31 December 2017: £0.13 million). Despite the Group's significant cash balances, individual Group trading companies utilise leverage where appropriate, and without recourse to the remainder of the Group.
Statement of financial position
Cash
Cash at the period end amounted to £17.43 million (30 June 2017: £14.36 million, 31 December 2017: £12.12 million). The increase in cash compared to the end of 2017 was due to the disposal of available-for-sale investments as noted above, along with the effects of underlying trading. Details of cash movements are shown in the consolidated statement of cash flows.
Available-for-sale investments
At the period end the Group had available-for-sale investments with a market value of £2.99 million (30 June 2017: £6.16 million, 31 December 2017: £6.34 million) with a base cost of £3.03 million. The unrealised loss has been dealt with through reserves and included in the consolidated statement of comprehensive income. The Group's disposal of available-for-sale investments during the first half of 2018 gave rise to an overall realised loss of £0.02 million on original cost, or £0.19 million compared to the valuation at the 2017 year end. The loss arising on the prior year unrealised gain has been recycled through the income statement.
In line with the Group's treasury management policies and pending investment in other acquisitions, the Group continues to consider short-term investments where there is the opportunity for attractive returns.
Earnings per share and share capital
Total basic and diluted earnings per ordinary share were 19.3 pence (30 June 2017: 8.2 pence; year ended 31 December 2017: 56.4 pence).
New IFRS implementation
IFRS 15 Revenue from Contracts with Customers is effective from periods beginning on or after 1 January 2018. The standard has been adopted by the Group for the first time in the period ending 30 June 2018. In the Automotive consulting segment, revenue on certain fixed-price contracts was recognised in line with the stage of completion of the contracts. In 2018, such revenue would be recognised upon the completion of specific deliverables. As part of the review for restatement of the comparative results, there were no material restatements identified as required in respect of such prior information.
Hedging
It is not the Group's policy to enter into derivative instruments to hedge interest rate or foreign exchange risk.
Key performance indicators (KPIs)
The Group uses key performance indicators suitable for the nature and size of the Group's businesses. The key financial performance indicators are revenue and profit before tax. The performance of the Group and the individual trading businesses against these KPIs is outlined above, in the Chief Executive's statement and disclosed in note 3.
Internally, management uses a variety of non-financial KPIs as follows: in respect of the food manufacturing sector order intake, manufacturing output and sales are monitored weekly and reported monthly; in the automotive consulting segment staff utilisation, amounts billed to clients and cash collected are closely monitored; order intake is monitored monthly in respect of the security solutions segment.
Principal risk factors
The Company and Group face a number of specific business risks that could affect the Company's or Group's success. These are set out more fully in the Group's Annual Report. The Company and Group invests in distressed businesses and securities, which by their nature often carry a higher degree of risk than those that are not distressed. The Group's businesses are principally engaged in the provision of services that are dependent on the continued employment of the Group's employees and availability of suitable, profitable workload. Also, in the automotive consulting and food manufacturing segments, there is a dependency on a small number of customers and a reduction in the volume or range of products or services supplied to those customers or the loss of any one of them could impact the Group materially.
These risks are managed by the Board in conjunction with the management of the Group's businesses.
Nick Lander
Chief Financial & Operating Officer
27 September 2018
Consolidated income statement
Note
6 months to
30 June
2018
6 months to
30 June
2017
Year ended
31
December
2017
£'000
£'000
£'000
Continuing operations
Revenue
3
22,198
18,540
43,418
Cost of sales
(17,703)
(14,732)
(33,693)
Gross profit
4,495
3,808
9,725
Distribution costs
(469)
(431)
(974)
Administrative expenses
(2,758)
(2,569)
(5,264)
Operating profit
1,268
808
3,487
Investment revenues
76
-
93
Other gains and losses
4
(23)
-
-
Finance expense
5
(70)
(74)
(164)
Finance income
5
29
22
38
Profit before tax
1,280
756
3,454
Income tax expense
(371)
(290)
(675)
Profit for the period
909
466
2,779
Attributable to:
- Equity holders of the parent
706
333
2,251
- Non-controlling interests
8
203
133
528
909
466
2,779
Earnings per share
6
Total
- Basic
19.3p
8.2p
56.4p
- Diluted
19.3p
8.2p
56.4p
Consolidated statement of comprehensive income
6 months to
30 June
2018
6 months to
30 June
2017
Year ended
31
December
2017
£'000
£'000
£'000
Profit for the period
909
466
2,779
Other comprehensive income (items that will be reclassified to profit or loss)
Fair value gains and losses on available-for-sale financial assets
- current period gains/(losses)
75
(102)
77
- reclassified to profit and loss
(188)
-
-
Revaluation of property
Deferred tax recognised on revaluation of property
-
-
-
-
260
(135)
Foreign exchange (losses)/gains on retranslation of foreign operations
-
(5)
(6)
Other comprehensive income
(113)
(107)
196
Total comprehensive income for the period
796
359
2,975
Attributable to:
Equity holders of the parent
593
227
2,423
Non-controlling interests
203
132
552
796
359
2,975
Consolidated statement of changes in equity
Six months to 30 June 2018
Share
capital
£'000
Share
premium
£'000
Revaluation
reserves
£'000
Retained
earnings
£'000
Total
£'000
Non-controllinginterests
£'000Total
£'000
Other comprehensive income
-
-
(113)
-
(113)
-
(113)
Profit for the period
-
-
-
706
706
203
909
Total comprehensive income for the period
-
-
(113)
706
593
203
796
Balance at 1 January
50
3,640
177
20,319
24,186
1,958
26,144
Transactions with owners:
Dividend paid by subsidiary
-
-
-
-
-
(50)
(50)
Total transactions with owners
-
-
-
-
-
(50)
(50)
Balance at 30 June
50
3,640
64
21,025
24,779
2,111
26,890
Six months to 30 June 2017
Share
capital
£'000
Share
premium
£'000
Revaluation
reserves
£'000
Retained
earnings
£'000
Total
£'000
Non-controllinginterests
£'000Total
£'000
Other comprehensive income
-
-
(102)
(4)
(106)
(1)
(107)
Profit for the period
-
-
-
333
333
133
466
Total comprehensive income for the period
-
-
(102)
329
227
132
359
Balance at 1 January
50
3,640
-
21,529
25,219
1,406
26,625
Transactions with owners:
Purchase of own shares
-
-
-
(54)
(54)
-
(54)
Total transactions with owners
-
-
-
(54)
(54)
-
(54)
Balance at 30 June
50
3,640
(102)
21,804
25,392
1,538
26,930
Year ended 31 December 2017
Share
capital
£'000
Share
premium
£'000
Revaluation
reserves
£'000
Retained
earnings
£'000
Total
£'000
Non-controllinginterests
£'000Total
£'000
Other comprehensive income
-
-
177
(5)
172
24
196
Profit for the year
-
-
-
2,251
2,251
528
2,779
Total comprehensive income for the year
-
-
177
2,246
2,423
552
2,975
Balance at 1 January
50
3,640
-
21,529
25,219
1,406
26,625
Transactions with owners:
Purchase of own shares
-
-
-
(3,458)
(3,458)
-
(3,458)
Share based payments
-
-
-
2
2
-
2
Total transactions with owners
-
-
-
(3,456)
(3,456)
-
(3,456)
Balance at 31 December
50
3,640
177
20,319
24,186
1,958
26,144
Consolidated statement of financial position
30 June
2018
30 June
2017
31 December
2017
Note
£'000
£'000
£'000
Assets
Non-current assets
Goodwill
380
380
380
Other intangible assets
-
24
8
Property, plant & equipment
5,296
5,559
5,424
Total non-current assets
5,676
5,963
5,812
Current assets
Inventories
2,291
2,396
1,466
Trade and other receivables
8,176
6,864
10,104
Cash and cash equivalents
17,430
14,361
12,119
Available for sale investments
2,994
6,156
6,335
Total current assets
30,891
29,777
30,024
Total assets
36,567
35,740
35,836
Liabilities
Current liabilities
Loans and other borrowings
(96)
(596)
(783)
Finance leases
(192)
(161)
(192)
Trade and other payables
(6,888)
(5,565)
(6,023)
Tax payable
(386)
(266)
(433)
Total current liabilities
(7,562)
(6,588)
(7,431)
Non-current liabilities
Loans and other borrowings
(1,306)
(1,401)
(1,353)
Finance leases
(221)
(361)
(315)
Total non-current liabilities
(1,527)
(1,762)
(1,668)
Total liabilities
(9,089)
(8,350)
(9,099)
Provisions - deferred tax
(514)
(376)
(514)
Provisions - lease incentive
(74)
(84)
(79)
NET ASSETS
26,890
26,930
26,144
Equity
Share capital
50
50
50
Share premium account
3,640
3,640
3,640
Revaluation reserves
64
(102)
177
Retained earnings
21,025
21,804
20,319
Capital and reserves attributable to equity holders of the Company
24,779
25,392
24,186
Non-controlling interests
8
2,111
1,538
1,958
TOTAL EQUITY
26,890
26,930
26,144
Consolidated statement of cash flows
6 months to 30 June 2018
6 months to 30 June 2018
6 months to 30 June 2017
6 months to 30 June 2017
Year ended 31 December 2017
Year ended 31 December 2017
Note
£'000
£'000
£'000
£'000
£'000
£'000
Profit for the period from continuing operations
909
466
2,779
Adjustments for:
Investment revenues
(76)
-
(93)
Other gains and losses
4
23
-
-
Finance expense
5
70
74
164
Finance income
5
(29)
(22)
(38)
Depreciation
239
228
664
Amortisation of intangible assets
14
16
31
Foreign exchange differences
-
(6)
7
Loss on disposal of property, plant and equipment
-
7
7
Share-based payment expense
7
-
-
2
Income tax expense
371
290
675
612
587
1,419
Operating cash flows before movements in working capital
1,521
1,053
4,198
Decrease/(increase) in trade and other receivables
1,928
368
(2,873)
Increase in trade and other payables
847
1,127
1,582
(Increase)/decrease in inventories
(825)
(314)
616
Tax paid
(424)
(208)
(422)
Cash generated from operations
3,047
2,026
3,101
Investing activities
Proceeds from sale of discontinued operations net of cash sold
-
-
-
Purchase of available-for-sale investments
-
(6,258)
(6,258)
Income from available-for-sale investments
76
-
93
Disposal of available-for-sale investments
3,205
-
-
Purchase of property, plant and equipment
(117)
(222)
(190)
Disposal of property, plant and equipment
-
-
-
Interest received
29
22
38
Net cash generated from/(used by) investing activities
3,193
(6,458)
(6,317)
Financing activities
Interest paid
(70)
(74)
(164)
Purchase of own shares (treasury shares)
8
-
(54)
(3,458)
Dividend paid by subsidiary
(50)
-
-
(Repayment of)/net new borrowings
(828)
(1,143)
(1,093)
Net cash used by financing activities
(948)
(1,271)
(4,715)
Net increase/(decrease) in cash
5,292
(5,703)
(7,931)
Cash at beginning of period
12,119
20,063
20,063
Foreign exchange revaluation of opening cash
19
1
(13)
Cash at end of period
17,430
14,361
12,119
Volvere plc
Notes forming part of the unaudited interim results for the period ended 30 June 2018
1 Financial information and basis of accounting
These interim financial statements have been prepared using accounting policies consistent with IFRSs as adopted by the European Union.
These interim financial statements should be read in accordance with the Group's last annual consolidated financial statements as and for the year ended 31 December 2017. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statements. AIM-listed companies are not required to comply with IAS 34 Interim Financial Reporting and accordingly the Group has taken advantage of this exemption.
This is the first set of the Group's financial statements where IFRS 15 and IFRS 9 have been applied. Changes to significant accounting policies are described in Note 2.
The comparative figures for the year ended 31 December 2017 have been prepared under IFRS. They do not constitute statutory accounts as defined by the Companies Act 2006. The accounts for the 12 months ended 31 December 2017 received an unmodified auditor's report and have been filed with the Registrar of Companies.
Copies of this statement will be available to members of the public at the Company's registered office: Warnford Court, 29 Throgmorton Street, London EC2N 2AT and on its website www.volvere.co.uk.
2 Changes in significant accounting policies
Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2017.
The changes in accounting policies are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 31 December 2018.
The Group has initially adopted IFRS 15 Revenue from Contracts with Customers from 1 January 2018. This has meant considering the requirement to restate the comparative results for the year ending 31 December 2017. In assessing this requirement, the Group did not identify any contracts that would have resulted in material restatement of the Group's comparative results.
The Automotive and Security solutions segments are affected by the adoption of the new standard. The effect of initially applying this standard has had no material effect on the Group's financial statements.
Explanation of significant areas for adjustment
The potential significant area for adjustment relates to the recognition of revenue on fixed price consulting contracts where the final deliverable is the performance obligation. Previously, revenue would have been recognised in line with the stage of completion.
IFRS 16 Leases has not been adopted in 2018 but will be with effect from 1 January 2019. The effects on the presentation of the Group's results arising from the adoption of IFRS 16 has not been established at the present time.
3 Operating segments
Analysis by business segment (excluding intra-Group interest and management charges and balances):
Analysis by business segment:
Period ended 30 June 2018
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Revenue
14,824
122
7,252
-
22,198
-
22,198
Profit/(loss) before tax(1)
1,921
6
(173)
(474)
1,280
-
1,280
Period ended 30 June 2017
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Revenue
12,163
97
6,280
-
18,540
-
18,540
Profit/(loss) before tax(1)
1,536
(25)
(237)
(518)
756
-
756
Year ended 31 December 2017
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Revenue
27,265
284
15,869
-
43,418
-
43,418
Profit/(loss) before tax(1)
3,604
47
635
(832)
3,454
-
3,454
As at 30 June 2018
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Assets
9,647
280
10,383
16,257
36,567
-
36,567
Liabilities/provisions
(4,852)
(240)
(4,393)
(192)
(9,677)
-
(9,677)
Net assets(2)
4,795
40
5,990
16,065
26,890
-
26,890
As at 30 June 2017
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Assets
7,411
214
9,670
18,445
35,740
-
35,740
Liabilities/provisions
(4,054)
(246)
(4,278)
(232)
(8,810)
-
(8,810)
Net assets(2)
3,357
(32)
5,392
18,213
26,930
-
26,930
As at 31 December 2017
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Assets
8,305
247
10,819
16,465
35,836
-
35,836
Liabilities/provisions
(4,593)
(215)
(4,640)
(244)
(9,692)
-
(9,692)
Net assets(2)
3,712
32
6,179
16,221
26,144
-
26,144
(1) stated before intra-Group interest and management charges
(2) assets and liabilities stated excluding intra-Group balances
Six months to 30 June 2018
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Capital spend
16
-
101
-
117
-
117
Depreciation
14
-
224
1
239
-
239
Amortisation/Impairment
14
-
-
-
14
-
14
Interest income (non-Group)
-
-
-
29
29
-
29
Interest expense (non-Group)
18
-
52
-
70
-
70
Tax expense
377
(6)
-
-
371
-
371
Six months to 30 June 2017
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Capital spend
9
7
206
-
222
-
222
Depreciation
20
-
208
-
228
-
228
Amortisation/Impairment
16
-
-
-
16
-
16
Interest income (non-Group)
-
-
-
22
22
-
22
Interest expense (non-Group)
20
-
54
-
74
-
74
Tax expense
290
-
-
-
290
-
290
Year ended 31 December
2017
Automotive consulting
£'000
Security solutions
£'000
Food manufacturing
£'000
Investing and management services
£'000
Total continuing
£'000
Discontinued
£'000
Total
£'000
Capital spend
34
6
223
-
263
-
263
Depreciation
48
3
613
-
664
-
664
Amortisation/Impairment
30
-
1
-
31
-
31
Interest income (non-Group)
-
-
-
38
38
-
38
Interest expense (non-Group)
44
-
120
-
164
-
164
Tax expense
650
-
25
-
675
-
675
Geographical analysis:
External revenue by location of customers
Non-current assets by location of assets
6 months to
30 June
2018
6 months to
30 June
2017
Year ended
31 December 2017
30 June
2018
30 June
2017
31 December 2017
£'000
£'000
£'000
£'000
£'000
£'000
UK
20,306
16,249
38,550
5,676
5,963
5,812
Rest of Europe
1,246
1,557
3,403
-
-
-
Other
646
734
1,465
-
-
-
22,198
18,540
43,418
5,676
5,963
5,812
4 Other gains and losses
The Company's unrealised treasury investment losses at the end of the period amounted £36,000 and these have been dealt with through other comprehensive income. During the period the Company disposed of certain other investments for a loss of £23,000 compared to the original cost; these investments had been revalued during the year ending 31 December 2017 and an unrealised gain of £188,000 had arisen and dealt with through reserves. Upon sale this has been transferred to the income statement.
5 Finance expense/income
The Group's finance expense relates to the debt servicing costs in the Group's subsidiaries, Shire Foods Limited and Impetus Automotive Limited, offset by interest earned on the Group's cash deposits.
6 Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
6 months to
30 June
2018
£'000
6 months to
30 June
2017
£'000
Year ended
31 December
2017
£'000
Earnings for the purposes of earnings per share:
From continuing operations
706
333
2,251
From discontinued operations
-
-
-
Total
706
333
2,251
No.
No.
Weighted average number of ordinary shares for the purposes of earnings per share:
Weighted average number of ordinary shares in issue
3,668,363
4,080,323
3,987,670
Dilutive effect of potential ordinary shares
-
-
-
Weighted average number of ordinary shares for diluted EPS
3,668,363
4,080,323
3,987,670
There were no share options (or other dilutive instruments) in issue during the period in respect of the parent company's shares (30 June 2017: nil; 31 December 2017: nil).
7 Non-controlling interests
The non-controlling interests of £2.11 million relate to the net assets attributable to the shares not held by the Group at 30 June 2018 in the following subsidiaries:
30 June
2018
£'000
30 June
2017
£'000
31 December 2017
£'000
NMT Group Limited
71
73
72
Shire Foods Limited
1,196
1,077
1,234
Impetus Automotive Limited
844
388
652
2,111
1,538
1,958
The Group owns approximately 83% Impetus and 80% of Shire Foods.
8 Purchase of own shares
The Company did not acquire any of its own Ordinary shares during the period (30 June 2017: 10,000 and 31 December 2017: 417,595). For reference, the total number of Ordinary shares held in treasury is 2,538,711 and the number of shares in issue, excluding treasury shares, at the period end was 3,668,363 (30 June 2017: 4,075,958 and 31 December 2017: 3,668,363).
9 Dividend
The Board is not recommending the payment of an interim dividend for the period ended 30 June 2018.
- Ends -
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